financing pollution prevention - a guide for small and ... · the booklet. trade associations...

Financing Pollution Prevention Investments

A Guide for Small and Medium-Sized Businesses

8 EPA New England -

US. Environmental Protection Agency JFK Federal Building

Boston, MA 02203-221 1

Northeast Waste Management Officials’ Association (NEWMOA)

129 Portland Street Boston, MA 021 14

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

JOHN F. KENNEDY FEDERAL BUILDING a REGION I

h d8 BOSTON, MASSACHUSETS 02203-0001

OFFICE OF M E REGIONAL ADMINISTRATOR

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This new Guide on Financing Pollution Prevention Projects is an invaluable tool for small- and medium-sized firms across the Northeast. EPA-New England is proud to have played a role in producing such a useful resource and grateful to everyone at NEWMOA for their good work.

At EPA-New England, we believe that promoting the region’s economy is part of our job. We’re committed to proving that green business practices lead to a golden economy. One of the central tools to achieving this is pollution prevention.

Pollution prevention is the comerstone of much of our work at EPA. One of the most promising developments in industrial settings, in homes, and at EPA is that pollution prevention is becoming a state of mind rather than a special project. It’s a cost-effective, common sense way to go about protecting the environment. EPA-New England is dedicated to promoting this valuable approach.

This guide helps make pollution prevention accessible to small- and medium-sized businesses who stand to benefit greatly from these techniques. Many companies would invest in money-saving, environmentally protective technologies and approaches -- if only they could afford the capital costs. This guide goes a long way toward making pollution prevention an option for a critical segment of the business community.

EPA encourages you to improve both the environment and your bottom line through pollution prevention. I hope that you take full advantage of this terrific resource.

Sincere1 y,

John P. DeVillars Regional Administrator

Table of Contents Section 1.

Section 2.

Section 3.

Section 4.

Section 5.

Introduction ........................................................................................................... 1

Summary Tables of P2 Financing Programs 3 federal Summary ............................................................................................................................. 5 Connecticut Summary ....................................................................................................................... 6 Maine Summary ............................................................................................................................... 7 Massachusetts Summary .................................................................................................................. 8 New Hampshire Summary ................................................................................................................ 9 Rhode IslandSummary ................................................................................................................... 10 Vermont Summary ......................................................................................................................... 11

Sources of P2 Financing ........................................................................................ 12

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Federal Programs Small Business Administration.. ...................................................................................................... 15 Department of Energy and Environmental Protection Agency ......................................................... 21

State Programs Connecticut Programs ..................................................................................................................... 23

Massachusetts Programs ................................................................................................................ 29 New Hampshire Pragrams .............................................................................................................. 33 Rhode Island Programs ................................................................................................................... 34 Vermont Programs .......................................................................................................................... 36

Private Sector Loans, Loan Guarantees,and Leasing ............................................. 39 Commercial Banks .......................................................................................................................... 39 Certified Development Corporations (CDCs) ..................................................................................... 4 1 Lease financing ............................................................................................................................. 41

LoadGrant Application Forms and Procedures ..................................................... 43 Standard Company and Project financial Analysis Data Requirements ........................................... 43 Putting Your Best Foot Forward: Presenting Your Project to a Potentiallnvestorhder .................. .44

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Maine Programs ............................................................................................................................ 25

Appendix A Sources of Information on Related Topics ............................................................ A-1

Appendix B: Sample Application Forms and Sample Monthly Cash Flow Forecast ................... B-1

Appendix C Glossary of Financial Terms .................................................................................. C-1

Evaluation Form ........................................................................................................................ D-1

Acknowledgements

This Guide was funded by a grant from the US. Environmental Protec- tion Agency-New England. NEWMOA is indebted to the U.S. EPA for its support. Additional in-kind support was provided by the Northeast states.

like to thank the members of the Project Advisory Committee: Stig Bolgen, Printing Industries of New England; Janet Clark, Massachusetts Toxics Use Reduction Institute; Linda Darveau, U.S. EPA-New England; Tom D'Avanzo, U.S. EPA-New England; Daniel DeVasto, Wolf and Company; Bob Ebberson, New Hampshire Small Business Development Center; Fred Friedman, Labatt Anderson; Gary Gulka, Vermont Department of Environmental Conserva- tion; Sally Mansur, US. EPA-New England; Dwight Peavey, U.S. EPA-New England; Laura Rome, Massachusetts Department of Environmental Protection; John Robison, U.S. EPA; Helen Scalia, Coastal Enterprises; Mary Sherwin, Connecticut Department of Environmental Protection; Jodie Siege], Massachusetts Toxics Use Reduction Institute; Christine Siegrist, Bank of Boston; Tom Sommer, New England Council; Dan Stulac, Arthur Anderson; and Dick Torborg, Massachusetts Office of Technical Assistance.

*he Guide was written by James Goldstein (Project Manager), Angela Dierks, and Deborah Savage, Ph.D. of Tellus Institute. John MacLean of Energy Efficiency Capital Corporation assisted Tellus in the area of private sector financing.

The NEWMOA Project Manager was Terri Goldberg, NEWMOA's Pollution Prevention Program Manager.

For their advice and assistance in preparing this Guide, NEWMOA would -

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Disclaimer The views expressed in this report do not necessarily reflect those of

NEWMOA; U.S. EPA; or the NEWMOA member states. Mention of any company or product name should not be considered an endorsement by NEWMOA, U.S. EPA, or the NEWMOA member states.

The Northeast Waste Management Officials' Association I The Northeast Waste Management Officials' Association (NEWMOA) is a

non-profit interstate governmental association whose membership is composed of the hazardous and solid waste program directors of Connecti- cut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island and Vermont. NEWMOA was established by the Governors of the northeast states as an official interstate regional organization and in accordance with Section 1005 of the Resource Conservation and Recovery Act, has been formally recognized by the US. Environmental Protection Agency. -

NEWMOA is a forum for increased communication and cooperation among the member states, a vehicle for the development of unified positions on various issues and programs, and a source of research and training on hazardous and solid waste management, pollution prevention and waste site cleanup. This Guide is a product of NEWMOA's Pollution Prevention Program.

in the following areas: (1) managing the Northeast States Pollution Preven- tion Roundtable - a regional roundtable of state and EPA pollution prevention staff; (2) coordinating several committees of the NE Roundtable; (3) training state and EPA officials and industry representatives in P2 concepts and methods; (4) publishing a quarterly newsletter on state P2 activities; and (5) managing a clearinghouse of P2 technical information.

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NEWMOA's well established pollution prevention (P2) program is active

For further information on NEWMOAls P2 programs and services contact:

Pollution Prevention Program NEWMOA

129 Portland Street,Sth Floor Boston,MA 02114 (617) 367-8558

Section 1

Introduction

The Guidebookgoes beyond a simple listing offinancing sources and assists small and medium-sized businesses in understanding and organizing the necessary information required by potential financiers.

Since the late 1980s, U.S. EPA and many state environmental agencies

assisting companies assess the technological potential of source reduction for various industries and specific manufacturing facilities. More recently, U.S. EPA and the states have recognized that a demonstration of technical potential, while necessary, is not sufficient to move private sector companies

impediments to P2 project investment exist, such as financial and institu- tional barriers.

of knowledge, especially in small and medium-sized companies, of how to obtain such financing when it is available. Some small and medium-sized businesses with less discretionary capital have had difficulty obtaining financing from lending institutions, such as banks, or from public sector sources. The difficulty of finding such financing serves as an impediment to some small companies interested in undertaking important initiatives that would enable them to eliminate sources of pollution and often realize significant operating savings.

EPA-New England to address this problem. The Guidebook goes beyond a simple listing of financing sources and assists small and medium-sized businesses in understanding and organizing the necessary information required by potential financiers. The ultimate aim is to help businesses who are actively pursuing P2 projects to effectively present their financing needs, and ultimately to maximize their chances of obtaining funding.

that have identified P2 opportunities. It includes potential public and private sources of financing for P2 projects throughout the six New England states. The Guidebook does not provide information on potential sources of venture capital for start-up companies or companies developing new environmental technologies.

This booklet is an important part of NEWMOA's ongoing efforts to promote pollution prevention (P2) strategies among New England businesses. In collaboration with the Massachusetts Office of Technical Assistance, NEWMOA has published a curriculum on financial analysis techniques for P2 projects that it uses in workshops. This booklet complements these training activities by providing information on the next step that will enable companies to translate the concepts of P2 into concrete action.

To determine the need for the proposed financing booklet, NEWMOA discussed the project with state P2 technical assistance programs and trade

sized businesses with the development and implementation of P2 programs, and all the state programs reported that financing is a significant impediment for many firms trying to purchase P2 equipment. The states indicated that a guide to financing would be useful in their outreach and technical assistance activities, and that they would be willing to collaborate with NEWMOA on the booklet. Trade associations confirmed the need for a financing guide among their memberships and also expressed a willingness to assist with the project.

have focused on encouraging upstream pollution prevention (P2)I by - -

to implement P2 investments. In addition to technical feasibility, other -

Among these barriers are a lack of financing for P2 projects and the lack

NEWMOA has developed this Guidebook through a grant from the U.S.

The Guidebook is written for existing small and medium-sized businesses

associations in New England. The state programs assist small and medium- -

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Introduction 1

The Guidebook is organized in a user- friendly format for small and medium-sized businesses attempting to secure financing for pollution prevention projects.

Guidebook Format Data collection for the Guidebook consisted of interviewing appropriate

personnel via the telephone and reviewing written materials on grant and loan programs. An Advisory Group comprising members of state environmental agencies, trade associations, private banks and small business technical assistance programs provided input on the development of the Guidebook.

The Guidebook is organized in a user-friendly format for small and medium-sized businesses attempting to secure financing for pollution prevention projects. Following this Introduction, Section 2 presents an

programs. Highlights of each financing program by specific source - federal, state, and private - are described in narrative form in Section 3. Section 4 presents a discussion of generic private financing sources including bank loans and leasing. Standard project financial data requirements, plus loan and grant application forms and procedures, are described in Section 5. This section also discusses how best to present a company’s project financing needs to a potential lender. Finally, three appendices are included A) a referrals section for a broad range of related topics and general financing opportunities not specifically related to P2; B) sample application and projected cash flow statement, a key document lenders usually require from a loan applicant; and C) a glossary of key terms.

An Evaluation Form is attached for Guidebook users to provide feedback to NEWMOA and U.S. EPA and to provide additional information on financing programs that may be included in future versions of the Guide- book.

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executive summary, including summary tables covering all major financing -

1 While there is a wide range of definitions for pollution prevention and source reduction, here we are adopting the definition used by US. EPA. Pollution preventionlsource reduction is any

any waste stream or otherwise released into the environment (including fugitive emissions) prior to recycling, treatment, or disposal, and which reduces the hazards to public health and the environment associated with the release of such substances, pollutants, or contaminants. The term includes equipment or technology modifications, process or procedure modifications, reformulation or redesign of products, substitution of raw materials, and improvements in housekeeping, maintenance, training, or inventory control. This guidebook does not include financing programs for energy efficiency, demand-side management (DSM), solid waste recycling, or pollution control.

practice which reduces the amount of hazardous substance, pollutant, or contaminant entering - ~ ~~

2 *Introduction

Section 2

Summary Tables of P2 Financing Programs The programs listed represent the range of new and innovative programs that hove emergedin the New England states in recent years.

The following tables summarize 18 specific lending or grant programs that are either directly P2 related or could be utilized for P2 investments. The programs listed represent the range of new and innovative programs that have emerged in the New England states in recent years. Both public and private sources are listed, with some of the public programs focusing solely

such as grants, loans, loan guarantees, and leasing. Based on their specific financing needs and the information provided in this Guidebook, small businesses need to identify and pursue those sources that are most appropriate for their particular circumstances. These summary tables are followed in Section 3 by a more detailed description of each program listed.

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on financing P2 investments. A variety of financing mechanisms are included -

Summary Tables of P2 Financing Programs * 3

4 * Summary Tables of PZ Financing Programs

Federal Summary: Pollution Prevention Financing Public Funding

Program Agenv Funding

7la)General Loan USSmall Business Program. Administration

(USSBA) through -l lxal bank.

ProgramType

Loan Guarantv.

Appl icant - Eligibi l i ty - Contribution

Applicant Project Requi rement

working c a p i l or

Notes and Amounts Special Application Further

Min Max Requirements Information

S1SS.WO or businesses that have participating been unable tosecure k a l bank. mnventionalfinandng. Seepage 15. Banks must follow SBA in te rm rate policy guidelines.

mntml facility. Banks mustfollow SBA interest rate policy guidelines.

Microloan Program.

504 Loan 3 Program.

USSBAthrough non-profit lending organizations.

USSBAthrough IhalCertfied Development Carparation (CDC).

Loan

.oan Guaranty.

E s

m w

lndusttial Energy (DOE) and

a

2 and konomicr 3

(NICU). In

Small business asdefined by the USSBA.

Small business asdefined bythe US SBA.

Anyusebutdebt repaymeilt.

Variable fee. None.

Long-term.fkeded- 10% equity None given. assetfinandng required. 17

s10,ow

NIA

S2S.wO

s1.ooo.0w fortheSBA guaranty.

Loans are targeted at businesses that have beenunabletomre conventional financing. Intermediary lenders must follow SBA interest rate policy guidelines.

10% of fundsfrom bnowecSO%from private lender;4096 guaranteedby USSBA andoffered thmugh CertEed Development Cop. (CDC).

Contact your Iml non-prom lending organization. See page 19.

Contact your local CDC. See page 21.

process has been streamlined. 617-568-4523.

Seepage23.

*N/A=NotAvailable.

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Connecticut Summary: Pollution Prevention Financing Public Funding Applicant Notesand

Pmgram Agency PmgramType Applicant Project Requirement Min Avg Max Requirements Information Funding - Eligibility - Conbibution Amounts Special Application Further

minimization of final reponwhich Brown, ConnTAl! Program. Assistance college, or hazardous waste,

Program hospital. wastewater project. See page 25. (ConnTAP). dixharge,or air

Reimbursement forcompleted pollution prevention projects.

Lmironmental Assistarm Revolving Loan Fund.

$100-250 $5O,OOo s150,wo 5250,OW app l icah fee ( d e p n k on loan sire).

(on n e ct i c ut Development Authority (CDA).

Competitive Loan. 1 Clsmall businesses(<l50 employees& <25 million in sales).

I I I I emissions. I I Applicant must submit twoapplicationsand a final repon.

Contact Roben Brown, ConnTAP. 203-241-0771 andSteve Benedeno, CDA, 203-25&7838. See page 27.

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Maine Summary: Pollution Prevention Financing Public Funding

Funding - Eligibi l i ty ~

Program Agency ProgramType Applicant Project

Program. recycling ofpost- consumer wastes orsolid wastes

Private Funding Funding ~ Eligibility ~

Program Agency PrcgramType Applicant Project . .

Green Fund. Coastal Enterprises, Inc. 1

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Loan. Smallormedium- sized businessin Maine.

Pollution prevention pmjec thatalsocreates orsustaim employment.

Appl icant Contr ibut ion Requirement

b a n origination feedueatclasing - 2% of loan amount.

Applicant Contr ibut ion Requirement

Nonesp&ied Yet.

Notes and Amounts Special Appl icat ion Further

Min Avg Max Requirements In fo rmat ion

Contact Finance Authority of Maine.

Notesand Amounts Speaal Appl icat ion FurIher

Min Avg Max Requirements In fo rmat ion

Nonegiven. This program isjust being initiated and somedetailsacnot available

* NIA = Not Available.

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Contact Coastal Enterprim, lnc., 201-882-1552. See page 31.

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Any industrial or commercial user oftoxic chemicals (listed in MATUR Act).

Technology 10Wbmatch Nonegiven. demos or feasibility studies, ir.methods, materials, & processes achieving TUR.

m

L-" 3

d

8 Proaram Aoencv PrwramTvPe AoDlicant Proiect Reauirement Min Avo Max

Massachusetts Summary: Pollution Prevention Financing Public Funding Applicant Notes and

E

Funding ~ Eligibility - Contribution Amaunts Special Application Further Information Reauirements

Matching Grants for Industry.

MAToxioUse Reduction institute (TURI).

Matching Grant. NIA" $ZS,MX)foI techn. demos, SSOOOfor feasibility studies.

Of particular intererr are projects fotusing on the manufacturing proms itcelf,which reduceor eliminatethe upfront use of a listed toxic chemid.

Contact Liz Hamman,TURI, 508-934-3275. See page 33.

MIFA. 7 Equipment Lease. 1 No limit. 7 MIFA serves as lesw, private company as sublersee,allowing for tax-exempt status of project.

Provides finanang fornew equipment leasing where equipment is integral to manufacturing process.

Manufacturing firms. Equipment

tease l Purchase Pmgram.

Krekorian or Eric Bmwn,MlFA,

Seepage3S.

- $2SO,WO Expanding

manufacturing and commercial b u s i n a s .

Market rates apply.

Notesand Special Application Requirements

ContactSteve Krekorian, MIFA, 617-451-2477. See page 37.

Fixed ass& (but not real estate) to help businesses expand and create i o k

Private Funding Applicant Contribution Amounts Requirement Min Avs Max

rangesfrom 1.5 percent to 3.5 percent ofthe

Funding Agency ProgramType

- Eligibility - ~ .. . .

Further Information

Contact Peter Initial telephone inquiriesarPencouraged. Holiingworth,

MBDC, 617-350-8877. 1 See page 39.

Program

Massthusem Capital Access Pmgram (CAP).

Applicant Project

Mass. Business Develop. Cop. (MBDC).

.Dan Guaranty. Smalland mediumsized firmsunable to recurefinandng from conventional lenders.

Purchase 01

construction of fixed business assets (land, plant equipment) and for woking capital.

*NlA=NotAvailabie.

New Hampshire Summary: Pollution Prevention Financing Private Funding

Pmgram Funding Agency PmgramType

Capital Access Program (UP).

B u r i n s Finance Authority ofthe State of New Hampshire.

aan Guaranty.

W

1 1 I

Appl icant Contribution Amounts __ Eligibility -

Applicant

withannual P I ~ S les than $5 million.

- NH businesses

Project Requirement Min Avs Max

fund.

S5W.OW 1 Notes and Special Application Requirements

A buriners applies for thelaanthmugh its lxal bank. Program ertablishes a fund which can reimburre banksfor losses.

* NIA =Not Available

Further Information

Contact your local bankarthe Business finance Authority, 643-271-2391. See page41.

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U

S

.- 2 n

10 * Summ

ary Tables of PZ Financing Programs

ldJI

z

0

z

0

Summ

ary Tables of P2 Financing Programs

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12 * Summary Tables of P2 Financing Programs

Section 3

Sources of P2 Financing We urge businesses to contact the financing organizations directly to discuss their needs and obtain themost current information on program parameters and application procedures.

The following short descriptions are meant to augment basic program information found in the Summary Tables. These descriptions should aid

opportunities. This section begins with a listing of federal sources of P2 financing, followed by an alphabetical listing of each state’s programs. However, they are only a starting point. Contacts are provided to facilitate further information collection and direct communication with potential funders. We urge businesses to contact the financing organizations directly to discuss their needs and obtain the most current information on program parameters and application procedures. Where information on financing history was available it has been included, however this was not the case for all programs.

- businesses in focusing their efforts on the most promising financing -

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Sources of P2 Financing * 13

14 * Sources of P2 Financing

F E D E R A L

Small Business Administration (SBA)

P R O G R A M S The U.S. Small Business Administration (SBA), an independent branch of 1 the Federal Government resuonsible for the develoument of small businesses, - provides management, procurement and financial assistance. Businesses access the financial assistance programs through local commercial lenders and private non-profit organizations that process the paperwork for SBA. Small businesses are eligible for the financing programs if they meet the size standards set by SBA. Size standards vary according to SIC code, but are generally characterized below for the various types of industries. If a business does not fit into the criteria below, it should contact the local SBA office (contact information is listed in Appendix A) for a specific ruling, as there are numerous exceptions to these ranges. Certain businesses, e.g., those involved in rental real estate and speculation, newspapers and lobbying groups, are ineligible for SBA financing. The following size ranges are based on the average employment for the preceding 12 months or the average sales volume over a three-year period. W Manufacturing:

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maximum number of employees ranges from 500 to 1,500 depending on the product manufactured. must employ no more than 100 employees. average annual receipts do not exceed $5 to $21 million, depending on the industry. average annual receipts do not exceed $13.5 to $17 million, depending on the industry. average annual receipts do not exceed $7 million. average annual receipts do not exceed $0.5 to $5 million, depending on the industry.

The SBA sets the maximum interest rates, either fxed or variable, that lenders may charge. Applicants are required to pay a fee for participation in SBA loan guaranty programs equal to two percent of the amount guaranteed. This fee is paid by the lender, which can pass the charge on to the borrower. All applicants for SBA assistance must demonstrate that credit is not available from conventional sources (such as directly from a bank) before applying for a SBA guaranty. Lenders require the applicant to complete an application, as well as an SBA application, which the lender is responsible for submitting to SBA for evaluation. SBA typically requires a maximum of twenty days to evaluate and process an application.

program, called LOWDOC, to decrease the processing time by reducing the

for expedited decision making under existing SBA programs for qualified applicants. According to SBA documentation, the LowDoc Program focuses

specific percentage of equity or collateral. Instead, these loans of up to $100,000 are based on the following:

W Wholesale: W Services & Retail:

General Construction:

W Special Trade Construction:

W Agriculture:

In the interest of improving customer service, the SBA has developed a

necessary paperwork. LowDoc is not a stand-alone program; rather, it allows

on the strength of character and credit of the applicant and does not require a

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Credit history - willingness to pay debts; Earnings, either historical or projected - repayment ability; and

H Belief that the financing aids the business in achieving success continued


Lenders active in other SBA programs may offer LowDoc loans at the discretion of the local field officer, who may choose to employ this program in cases where a quick turn-around time is especially desirable. The LowDoc program has an SBA processing time of three days.

The LowDoc program maintains the same interest rate, dosing and guaranty fee policies as those outlined above. It is only available to an

proposed loan) does not exceed $100,000. LowDoc requires a completed application form for loans up to $50,000. For loans between $50,000 and $~Oo,OOO, the program requires the following materials: 1) a completed application form; 2) lender’s internal loan report with cash flow analysis and pro-forma balance sheet; 3) income tax returns for last three years; and 4) personal financial statements for all obligers and guarantors, if applicable.

The Small Business Administration has developed the above policies to improve access of small businesses to sources of financing. The size categories ensure that the guarantees are reserved for small businesses because they typically have more difficulty accessing the capital they need for growth and stability. With the interest rate policy, the SBA balances the need to make the loans affordable and the need to respond to the risk the bank is undertaking. The LowDoc Program streamlines the traditional application procedure by allowing low risk borrowers to access the system in a more timely fashion. The following sections describe four SBA programs that could help small and medium-sized firms finance P2 investments.

applicant when the total outstanding balance of all SBA loans (including the - ___

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16 Sources of PZ Financing

F E D E R A L

SBA General 7(a) Guaranteed Business loan Program Q P R O G R A M S I Proaram Descriotion <

The 7(a) program, SBA’s general loan guaranty program, helps small - businesses obtain long-term capital by guaranteeing up to 90 percent of a lender’s loan. This program enhances small business growth and/or facilitates the formation of a new small business. Loan funds may be used for purchases related to real estate, equipment and inventory, as well as for purposes of working capital and expans~on.

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Funding Parameters Percent of loan guaranteed - 70 percent to 90 percent; depends on the use of the loan proceeds, dollar amount requested, and loan program. Maximum guaranty amount - $750,000

g Interest rates - depends on maturity and size of the loan.

Application Procedures Applicants may apply for this program through their participating

commercial bank. Application procedures vary from bank to bank.

Contact Information Your participating local bank -0R- Your state SBA office (see Appendix A, Referrals) -0R- The Small Business Answer Desk 800-8-ASK-SBA

Sources ofP2 Financing * 17

- This SBA loan guaranty program is a version of the 7( a) program that is

for use only in the financing of a “pollution control facility,” which the SBA literature defines as one of the following:

W “Real or personal property which is likely to prevent, reduce, abate or

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control noise, air or water pollution or contamination, by removing, altering, disposing or storing pollutants, contaminants, wastes or heat.

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H Real or personal property which will be used for the collection, storage, treatment, utilization, processing or fmal disposal of solid or liquid waste.

H Any related recycling property when a local, state or federal environmental regulatory agency says it will be useful for pollution control.”

Funding Parameters W Maximum guaranty amount - $1 million or up to 90 percent of the

loan minus amount owed by borrower under other SBA guaranty programs.

H Maturity - depends on the applicant’s ability to repay. In cases of machinery and equipment, this period must not exceed its conserva- tive economic life. Real estate and construction loan maturities cannot exceed 25 years.

H Interest rates - depends on maturity and size of the loan.

Application Procedures Applicant applies for the loan at a participating commercial lending

institution, which then evaluates the applicant’s compatibility with the program. If proposed project fulfills the SBA definition of a “pollution control facility,” and the applicant would otherwise not he granted financing, the loan officer may file an application with SBA. The applicant must pledge adequate collateral and personal guarantees when requested. Application procedures vary from bank to bank, but the requirements are similar to those for regular commercial bank loans.

Contact Information Your participating local bank -0R- Your state SBA office (see Appendix A, Referrals) -0R- The Small Business Answer Desk 800-8-ASK-SBA

18 *Sources of PZ Financing

The MicroLoan Program is a relending program in which SBA makes a - loan to a nonprofit intermediary that, in turn, makes the individual loan to a small business. The program offers term loans up to $25,000 to small businesses in need of capital to purchase machinery and equipment, furniture and fuctures, inventory, supplies and working capital. The loan may not be used to pay existing debts. These loans are administered through responsible private nonprofit intermediaries that have experience in both lending and technical assistance. SBA selects and approves these nonprofit intermediaries prior to their participation in the MicroLoan Program. The applicant must provide sufticient collateral either in the form of liens on the assets financed by the loan or personal guarantees by the owners of the business.

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Funding Parameters Minimum Loan - none Maximum Loan - $25,000 Maximum Maturity - 6 years

Application Procedures

Contact Information

Application procedures vary according to the nonprofit organization.

Your participating private nonprofit -0R- Your state SBA office (see Appendix A, Referrals) -0R- The Small Business Answer Desk 800-8-ASK-SBA

Sources of P2 Financing 19

F E D E R A L

SBA 504 Certified Development h d Company Loan Program P R O G R A M S

- Program Description This program provides long-term, fixed-asset financing through certified ___

development companies, private nonprofit organizations or state or local government. The loan consists of the following:

W Unguaranteed hank loan - 50 percent W SBA-guaranteed CDC loan - 40 percent W Small business equity- 10 percent

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Funding Parameters W Maximum SBA guaranty amount - $1,000,000 W Interest rates - depends on the maturity and size of the loan

Application Procedures Application procedures depend on the institution. The certified develop-

ment company, nonprofit or government organization organizes the financial package, completes all SBA paperwork, and processes, services and closes the loan.

Contact Information Your participating certified development corporation, private nonprofit, or state or local government

-0R- Your state SBA ofice (see Appendix A, Referrals) -0R- The Small Business Answer Desk 800-8-ASK-SBA

20 . Sources of P2 Financing

F E D E R A L Department of Energy (DOE) and Environmental Protection Agency (EPA)

National Industrial Competitiveness through P R O G R A M S Energy, Environment, and Economics (NICE3) Q

Program Description

on advancing competition, increasing energy efficiency, and reducing waste. NICE’ is a joint DOE and EPA cost-sharing grant program that focuses

- DOE and EPA believe that the most effective way to accomplish these goals is through cleaner production and gives preference to proposals oriented towards pollution prevention. These demonstration projects should attempt to show a simultaneous reduction in industrial energy use and industrial process waste, and an improvement in process economics. The program focuses on those industries that have high energy consumption, relatively high emissions, and high pollution control costs. Industries of particular interest are Chemicals and Allied Products (SIC 28), Petroleum and Coal Products (SIC 29), Paper and Allied Products (SIC 26), and Primary Metal Industries (SIC 33). However, other manufacturing and certain waste- generating service industries are also encouraged to apply for funding.

The program provides financial assistance to state and industry partnerships. Only state agencies (in conjunction with industry partners) may apply for funding and must be able to match 100 percent of the grant award with some combination of state and industry funding. Note that historically the bulk of the funding under this program has been directed at larger energy efficiency projects. However, last year the program was broadened to include waste minimizationlpollution prevention projects. In addition the application process was streamlined to make it more accessible to small and medium-sized businesses.

Funding Parameters W Maximum Grant - $425,000 W Average Grant - $300,000 W Total funding available for FY 1995 - $7,450,000 W Total funding since 1991 - $7,800,000 W Total number of projects since 1991 - 26 projects

Application Procedures

two-page project abstracts from February to October for feedback from

Assistance in forming partnerships with state agencies is available from the contacts listed below. State and industry partners may submit optional

DOE/EPA. The solicitation runs from November to January and awards are announced in April. The final application must be submitted by the state agency and is outlined in the solicitation. Some relevant categories of information required from the applicant include the following:

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- W Proposed project description W Energy savings W Economic competitiveness W Expected impacts on labor

W Cost efficiency W Waste savings W Commercialization of the findings W Budget

continued

Sources of P2 Financing 21

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Contact Information Michael Mernick U.S. DOE 1 Congress Street, Suite 1101 Boston, MA 021 14 617-565-9714 phone 617-565-9723 fax

Abby Swaine (PAS) U.S. EPA JFK Federal Building, Room 2203 Boston, MA 02203 617-565-4523 phone 617-565-3346 fax


The Connecticut Technical Assistance Program (ConnTAP) established the Matching Challenge Grant Program in 1988. The purpose of the program is to assist Connecticut organizations in developing and evaluating programs to prevent and minimize hazardous waste, wastewater discharges, and air emissions. Traditionally, grant projects identify waste minimization opportunities (either plant-wide or process-specific), evaluate solutions to a waste management problem, or conduct a pilot study of a specific waste minimization solution, technology, or method. However, any project related to the appropriate management of hazardous waste, wastewater, or air emissions is eligible.

also cost effective, reduce liability, and benefit the environment. The grant money is targeted at demonstration projects that can educate a larger community. Although the funding is not limited to pollution prevention proposals, ConnTAP gives more weight to those projects producing upstream reduction when choosing among similarly rated proposals during application evaluation. Recipients of grant money must undertake a post-project feasibility study that evaluates the project’s effectiveness. Any Connecticut organization, college, hospital, or business is eligible to apply for the grant provided that it can match 100 percent of the grant funds.

- -

-

Eligible projects should demonstrate ways of minimizing waste that are

Funding Parameters H Maximum Grant - $5,000

Total funding available for 1994 - $15,000 Total number of projects since 1988 - 22

Application Procedures ConnTAP accepts applications each Fall and attempts to contact each

applicant in order to discuss the proposed project. ConnTAP typically investigates the business’s compliance with environmental regulations. Noncompliance is not automatic justification for rejecting the application, but willful noncompliance can be a determining factor. The application form requires the following information:

Description of the problem that the project will attempt to address Outline of proposed grant project (including a schedule of tasks)

m Names of contractors, consultants, and suppliers for project Budget Quantification of expected results and benefits of proposed project Financial references or statements

__

Contact Information Robert Brown ConnTAP 50 Columbus Boulevard, 4th Floor Hartford, CT 06106 203-241-0777 phone 203-244-2017 fax


Program Description

businesses in financing pollution prevention activities. The Connecticut In 1992 this program created a dedicated fund of $10 million to aid small -

- Technical Assistance Program (ConnTAP) and the Connecticut Development Authority (CDA) administer the technical and economic aspects of the program respectively.

The program focuses on small businesses that are experiencing difficulty obtaining funds for pollution prevention projects because of environmental non-compliance or other high risk factors. The program works as a reimbursement loan (Le. the business receives the money only after the project has been completed). Recipients of the loan must generate a report in which the qualitative and quantitative aspects of the project are outlined, as well as provide ongoing financial statements. To be eligible Connecticut businesses must have less than 150 employees and annual sales of less than $25 million.

-

Funding Parameters W Maximum Loan - $250,000 W Minimum Loan - $50,000

Total awarded since 1992 - $150,000 W Total number of projects since 1992 - 1 W Rates - London Inter-Bank Offered Rate (LIBOR) + 2 percent paid

Total funding available annually - Varies according to fund activity off in fured monthly payments over 10 years

Application Procedures Applications are accepted year-round, and both agencies offer assistance

to applicants. First, the applicant submits an application to ConnTAP, which assesses the technical feasibility and appropriateness of the project with respect to the selection criteria of the program. Once approved by ConnTAP, the applicant must submit a separate application to CDA along with an application fee ranging from $100 to $250 depending on the size of the loan. The following information is required

ConnTAP CDA W Problem description W Project outline (schedule of tasks) W Names of contractors, consultants,

W Budget W Expected resultslbenefits of project W Financial references and statements

W Employment figures (past and projected) W Loan breakdown

Debt and real estate holdings

W List of ownership and management W Professional references W Business plan

suppliers -

Contact Information Robert Brown Steve Benedetto ConnTAP CDA 50 Columbus Boulevard, 4th Floor 845 Brook Street Hartford, CT 06106 Rocky Hill, CT 06067 203-241-0777 phone 203-258-7838 phone 203-244-2017 fax 203-257-7582 fax

24 *Sources of P2 Financing

M A I N E

The Finance Authority of Maine (FAME) administers this program, - which provides loans primarily to small businesses that will most assist the state in achieving the goals of the State Waste Management and Recycling Plan. Eligible projects must focus on one of the following: 1) substantial reduction or elimination of the production of solid or hazardous waste in a trade or business; 2) re-use of post-consumer materials; or 3) recycling or composting of solid wastes. Of the waste handled in the project, 90 percent must be generated in Maine. The project should not result in a net increase in solid and hazardous waste disposed of within the State.

-

-

I Funding Parameters W Maximum Loan - $50,000 per project W Maximum Repayment - 7 years W Interest rate - 4 percent if more than 50 percent of total project

costs from other sources - 8 percent if less than 50 percent of total project costs from other sources

Waste Reduction and Recycling loan Fund Program

P R O G R A M S I Program Description

Sources ofPZ Financing. 25

Program Description The Green Fund is a new joint program of the Maine Department of

Environmental Protection (ME DEP)/Office of Pollution Prevention and Coastal Enterprises, Inc. (CEI). The ME DEP provides technical assistance, and CEI provides the financing and business assistance components. CEI is a private, nonprofit community development corporation that focuses on developing opportunities for low income citizens in Maine by promoting economic growth and high quality jobs. The Green Fund provides financing for businesses that have difficulty accessing conventional financing. It finances small businesses to make equipment and process changes to comply with state and federal environmental regulations, including the Clean Air Act. It encourages companies to make changes that go beyond compliance and encourages prevention over the long run. The Green Fund will also provide debt financing to businesses engaged in the production of P2 products or the development of P2 services.

-

-

-

Funding Parameters Maximum compliance loan - for equipment and process changes, initially up to $20,000, although most loans expected to be smaller Up to $250,000 to firms with P2 technologies and services

Application Procedures The application procedure is not yet formalized, but will include financial

information typical of that required by a bank. The application procedure for compliance loans may consist of an environmental audit to assess the compliance problem and determine possible alternatives, followed by a meeting with CEI to evaluate the company’s eligibility for financing. CEI typically requests loan applicants to submit a business plan to CEI prior to meeting with a loan officer. CEI’s Small Business Development Center provides assistance in preparing a business plan.

Contact Information Diane Branscomb Coastal Enterprises, Inc. Water Street P.O. Box 268 Wiscasset, ME 04578 207-882-7552 phone 207-882-7308 fax


MASSACHUSETTS

Toxics Use Reduction Institute Q P R O G R A M S Matching Grants for Industry

Program Description __

that develop innovative technologies, use existing technologies in innovative

The Toxics Use Reduction Institute, located at the University of Massa- chusetts at Lowell, provides funding for toxics use reduction (TUR) projects

manners, and develop information that can be transferred to other industries. The Institute was established by the Toxics Use Reduction Act of 1989 with a mission to reduce the use of toxic chemicals or the generation of toxic byproducts in Massachusetts industry.

feasibility studies. Technology demonstrations include development or installation and testing of equipment, materials or processes that result in TUR, with priority given to new, unproven or innovative techniques. Adaptation of “off-the-shelf” equipment or processes from another industry are also included. Feasibility studies involve a systematic evaluation of the costs, benefits, and technical feasibility of implementing potential toxics use reduction techniques.

Massachusetts industrial or commercial organizations that produce, use, or generate toxic chemicals are eligible to receive the matching grants. A project can qualify if it satisfies the definition of toxics use reduction in the MA TUR Act:

-

Funding focuses on two types of projects: technology demonstrations and

“...in-plant changes in production processes or raw materials that reduce, avoid, or eliminate the use of toxic or hazardous substances or generation of hazardous byproducts per unit of product, so as to reduce risks to the health of workers, consumers, or the environment, without shifting risks between workers, consumers, or parts of the environment.”

The Toxics Use Reduction Act defines TUR in terms of six techniques: product reformulation, input substitution, production unit redesign or modification, production unit modernization, improved operation or maintenance of production unit, and in-process recycling. Excluded from TUR are end-of-pipe solutions, Le., waste treatment that transfers pollutants from one medium to another. Also excluded are recycling techniques that are not an integral part of the process generating the material to be recycled.

A single organization must be responsible for the project and all required reports; joint proposals are not acceptable. The recipient organization may propose to use other firms as consultants as long as all parties’ roles are clearly stated. Applicants must provide a 100 percent match of the grant amount. Allowable costs include labor, materials, consulting fees, and testing.

include capital equipment, engineering plans, travel and legal fees. Costs not allowed but which the recipient may use as part of the match

Funding Parameters

-

W Maximum grant (one-half total cost of project) $25,000 - technology demonstrations $ 5,000 -feasibility studies Total funding for FY 1995 - $35,000 FY 1993 - 1995 funded 17 projects for total of $180,000

continued

Sources of PZ Financing a 27

Application Procedures The grant cycle is based on the Massachusetts fiscal year, July 1 to June 30.

A Request for Proposal is issued by TURI in about February with applications due by the end of April. Applications must contain a detailed project description including methodology, key tasks, expected results, and resumes for key personnel. Application cover sheets and budget forms are provided by TURI. TURI provides assistance in preparing applications. Notification of grants awards occurs in June, followed by the signing of grant agreements between the recipient and TURI. Recipients must prepare project reports, which become public documents. Reports are used by TURI as a technology transfer tool, to assist other companies with similar problems.

- __

-

Contact Information Elizabeth Harriman Massachusetts Toxics Use Reduction Institute University of Massachusetts Lowell One University Avenue Lowell, MA 01854-2881 508-934-3275 phone 508-934-3050 fax

28 * Sources of PZ Financing

MASSACHUSETTS

MI FA Tax-Exempt Equipment Lease/Purchase Q P R O G R A M S Program -

1 Program Description __ The Massachusetts Industrial Finance Agency (MIFA) is an independent

public agency established in 1978 to stimulate private investment and job creation through a variety of financing incentives. It has statutory authority to issue bonds, insure loans, and make direct loans through a variety of financing techniques. MIFA offers a Tax-Exempt Equipment Lease/Purchase Program for manufacturers and environmental projects (defined as sewage treatment, solid waste, and recycling facilities). This program provides tax- exempt financing for new equipment leasing for qualified projects where the equipment is integral to the manufacturing process. Loan amounts are generally in excess of $300,000. Under this program, MIFA serves as the lessee and subleases the equipment to the private company. MIFA's participation provides the tax-exempt status for the capital lease, allowing eligible borrowers to access lower cost capital.

-

Funding Parameters W Interest rates vary by project/applicant and according to market

conditions, but for projects eligible for tax exempt lease/purchase program interest rates are approximately 70 percent of traditional borrowing rates on a capital lease.

W A percentage of soft costs, including installation and financing fees, may also be financed.

Application Procedures W Standard application must be completed, but applicants are encour-

aged to work closely with MIFA staff prior to submitting an application.

Contact Information Steve Krekorian, Eric Brown Massachusetts Industrial Finance Agency 75 Federal Street Boston, MA 02210 617-451-2477 phone

Sources of P2 Financing - 29

- The Massachusetts Industrial Finance Agency (MIFA) is an independent

public agency established in 1978 to stimulate private investment and job creation through a variety of financing incentives. It has statutory authority to issue bonds, insure loans, and make direct loans through a variety of financing techniques. For smaller projects and those not eligible for tax- exempt financing, MIFA offers direct loans and loan guarantees. For an individual project, MIFA's total commitment typically does not exceed $250,000. These loans and guarantees are capitalized out of MIFA's own reserves and are made at market rates. In addition, MIFA has several other financing programs including a Credit Enhancement Program for environmental technology companies whereby it supplements financing from local banks.

- __

-

Funding Parameters Direct loans and loan guarantees vary by project/applicant, but are

W Maximum commitment (loan and/or guarantee) $250,000. W Typical loan is for 2-4 years.

based on market rates.

Application Procedures Standard application must be completed, but applicants are encouraged to work closely with MIFA staff prior to submitting an application.

Contact Information Steve Krekorian Massachusetts Industrial Finance Agency 75 Federal Street Boston, MA 02210 617-451-2477 phone 617-451-3429 fax


MASSACHUSETTS

Massachusetts Capital Access Program Q P R O G R A M S I Program Description

I The Massachusetts Capital Access Program (Mass CAP) is a collaboration between government and the private sector established in 1993 by the Commonwealth of Massachusetts to provide debt financing to small businesses. In addition to the normal interest charges, the borrower pays a premium ( 1’/2 to 3‘/2 percent of loan) into a reserve fund established to cover potential losses from CAP loans. Participating banks match this sum, and the program administrator, Massachusetts Business Development Corporation (MassBusiness), uses designated state funds to match the combined total of the borrower’s and bank‘s contributions. This reserve fund allows participating banks to be more flexible in their small business lending. Under this program, MassBusiness provides loan guarantees to more than 70 participating banks for loans up to $500,000.

Massachusetts Business Development Corporation, a privately-owned company formed in 1953, has other lending programs to meet the need for medium and long-term financing for firms that, for various reasons, do not qualify for financing from conventional lenders. As an asset-based, secondary lender, MassBusiness is typically introduced to businesses by other lenders. In such cases, a loan officer works with both the company and the primary lender. MassBusiness loans are secured by first or second mortgages on real estate and/or liens on machinery and equipment. MassBusiness provides loans for machinery, equipment, and working capital. In addition, through its affiliate the Massachusetts Certified Development Corporation, it offers low- cost, fKed-rate SBA 504 loans.

-

-

Funding Parameters (Capital Access Program only)

W Maximum CAP loan - $500,000 H Interest rates vary with the bank and market conditions W Loan fees of to 3’/, percent, depending on size and type of loan

Application Procedures Initial telephone inquiries are encouraged. If appropriate, a borrower will

be invited to MassBusiness for more in-depth discussion and analysis. Typically, a MassBusiness investment officer will visit the company’s business and gather appropriate information. For cases where financing is appropriate, MassBusiness will present a formal proposal letter for the borrower’s review, detailing the financing terms. The process from initial inquiry to proposal usually takes two weeks. Prior to formal approval, the following information must be provided -

H Amount, type, and purpose of loan request H Three year operating history, including fiscal year-end statements W Profit/loss, cash flow forecasts H Accounts receivable aging, accounts payable aging, inventory description W Fixed asset appraisals, where appropriate

Environmental assessments, where appropriate W Personal financing statements on principles and management resumes

-

- W Completed Business History Questionnaire

continued

Sources of P2 Financing - 31

Contact Information Peter Hollingworth, Director, Capital Access Program Massachusetts Business Development Corporation One Liberty Square Boston, MA 02109 617-350-8877 phone 617-350-0052 faX

. -

32 e Sources of P2 Financing

NEW HAMPSHIRE

Capital Access Program

P R O G R A M S 1 Program Description The Business Finance Authority (BFA) has developed several loan

programs to facilitate economic development and enhance employment opportunities in New Hampshire. The Capital Access Program (CAP), initiated in 1992, helps small businesses by providing incentives to banks that make loans to small businesses that are considered to be at above average risk. The program works by creating a loan loss reserve, CAP Fund, to which banks may charge losses under this program. The CAP Fund is created through contributions from the BFA, the borrower, and the bank.

less than $5,000,000 are eligible for the CAP Program. The program is aimed at small businesses that are having difficulty obtaining financing, therefore a business that has been recently turned down for a loan is eligible for this program. To participate in the CAP Program, the borrower and the bank must pay between 3 percent and 4 percent of the loan amount into the CAP Fund. Banks are required to pay at least 25 percent of this fee, but are allowed to recover its portion of the fee from the borrower. The BFA contributes two and one-half times the total contribution by the borrower and bank.

- __

-

Both new and established New Hampshire businesses with annual sales

Financing Parameters W Maximum Loan - $500,000 W Amount of Loans Currently Active Under Program - $13,000,000 W Maximum Lending Capacity of Program - $66,000,000

Application Procedures The CAP Program is accessed through 60 financial institutions in New

Hampshire. In most cases, these lenders do not require additional paperwork beyond what they already require for small business lending. The application procedures vary from bank to bank.

Contact Information Your participating local bank

Business Finance Authority Four Park Street, Suite 302 Concord, NH 03301-6313 603-271-2391 phone 603-271-2396 fax

-0R-

I


RHODE ISLAND

Rhode Island Pollution Prevention Grants Program P R O G R A M S Program Description

In 1986, the Hazardous Waste Reduction, Recycling, and Treatment Research and Demonstration Act authorized the establishment of the Pollution Prevention Grants Program, which is administered by the Depart- ment of Environmental Management’s Office of Environmental Coordina- tion. This program consists of the following five grants that are intended to promote technologies that have the potential to reduce or eliminate pollution at its source:

W Step I Grant - 90 percent of feasibility study costs are eligible up to

W Step I1 Grant - 70 percent (90 percent for small businesses) of design

Step 111 Grant - 50 percent (90 percent for small businesses) of

W Step IV Grant - 90 percent (100 percent for small businesses) of

W Research Grant -funding varies according to proposed project Ineligible projects relate to radioactive materials, non-hazardous waste,

waste resulting from the cleanup and treatment of hazardous waste sites, and projects focusing on improvement in production rather than reduction of pollution. The agency particularly encourages applications from businesses that generate large quantities of toxic waste or pollutants and employ toxic materials in processes that are widely used in the State.

-

-

-

$40,000

costs are eligible up to $75,000

construction costs are eligible up to $250,000

project evaluation costs are eligible up to $50,000

Funding Parameters W Total awarded since 1988 - $1,400,000 W Total number of projects since 1988 - 23

Application Procedures The Department will accept multiple applications under any step grant if

the applications relate to different processes or projects. However, the applicant must complete previous step work before a grant will be awarded for a higher step. For example, the project design must be complete in order for a business to receive a construction grant. The application requires the following information:

W Project description W Budget W Work schedule W Product description W Resumes

W Scope of work statement

- Contact Information

Pollution Prevention Grants Program Rhode Island, Department of Environmental Management Office of Environmental Coordination 83 Park Street Providence, RI 02903-1037 800-CLEAN RI (in RI only) phone 401-277-3434 phone 401-277-2591 fax

34 - Sources of P2 Financing

RHODE ISLAND

Non-Governmental Water Pollution E;3 P R O G R A M S Control Facilities Fund

Program Description -

In 1986, a $35 million Clean Water bond referendum passed, of which $1.5 million was earmarked in 1993 for the Non-Governmental Water Pollution Control Facilities Fund. The Department of Environmental Management, Division of Water Resources administers the fund and awards matching grants to businesses that cover up to 50 percent of the project costs, not exceeding $75,000. Eligible projects focus on water pollution abatement (including pretreatment) undertaken by private businesses, colleges, universities, hospitals, non-profit organizations, and public utilities. The next round of grants will occur in the Spring of 1996.

Funds may not be used for experimental projects, projects that focus on improving productivity rather than reducing pollution, research projects, or projects that attempt to redress a criminal violation. Recipients of the grant receive periodic reimbursements for project expenses and must be willing to share any and all information from the project. The project must be approved by the applicable local entity (i.e. sewer authority).

-

Funding Parameters W Maximum Grant - $75,000

Minimum Grant - $2,500 W Total awarded since 1993 - $360,000 W Anticipated funding for 1996 - $750,000

Application Procedures In order to be considered for funding, the project must address a source

of pollution to state waters and provide a reliable means of mitigating the identified pollution problem. Projects are ranked with a point system that considers the following variables:

W Severity and magnitude of problem W Value of the resources to be protected W Beneficial impact to state water or POTW W Readiness to proceed

Once a request for proposals is issued, applicants should submit a letter of application that contains the following information:

Statement of the project goal W Eligibility of the project W Outstanding compliance violations

Disclosure of permits from DEM, US. EPA

W Environmental benefits of the project W Project schedule and budget W Agreement to share data from

- demonstration project

Contact Information Ramon Pena DEM, Division of Water Resources 291 Promenade Street Providence, RI 02908 401-277-3961 phone 401-521-4230 fax


V E R M O N T

Pollution Prevention Incentive Grants P R O G R A M S

Program Description The Pollution Prevention Division (PPD) of the Vermont Agency of

Natural Resources initiated the matching grant program in 1993 and funded it through the PPD’s budget. Eligible projects reduce the use, generation, or release of pollutants at the source, protect natural resources using conservation techniques, or increase resource, energy, or materials use efficiency. Pollution control projects are not eligible. Any Vermont-based organization with fewer than 100 employees that is in compliance with all applicable environmental, safety, and health regulations may submit an application, provided that it can match the grant 100 percent either in cash or with in- kind services.

-

-

-

Funding Parameters Maximum Grant - $5,000

W Total funding available for 1994 - $25,000 W Total awarded since 1993 - $10,000 W Total number of projects since 1993 - 2

Application Procedures The program evaluates proposed projects based on the following criteria:

environmental benefit of the project; innovation; adequacy of work plan, time frame, and budget; applicability of project for other businesses; and applicant’s ability to achieve project goals. Interested parties may apply for a matching grant by submitting a cover letter and a letter of application (maximum of five pages) that contains the following information:

Cover letter Application letter W Name of project W Paragraph description of project

W Name, address, phone number

W Amount of funding requested

W Statement of problem being addressed W Project tasks and anticipated

W EnvironmentaUhealth benefits and

W Proposed budget and sources of

W Intended approach for project

completion date

of applicant applicability

matching funds

evaluation

Contact Information Paul Van Hollebecke VT ANR PPD 103 S. Main Street Waterbury, VT 05671-0404 800-974-9559 phone 802-241-3888 phone 802-241-3296 fax


V E R M O N T

lake Champlain Basin Matching Grants Program El for Pollution Prevention and Control P R O G R A M S

Demonstration Projects -

Program Description The Lake Champlain Basin Program (LCBP), a non-profit organization -

responsible for administering programs under the federal Lake Champlain Special Designation Act of 1990 administers this program. LCBP has designated part of its EPA funding for these matching grants, which have been awarded annually since 1993. LCBP funding is guaranteed until 1995, and the Program allocates grant funds on a year-by-year basis. The program awards matching grants to municipalities and industrial facilities that demonstrate water pollution prevention and/or control relating to the Lake Champlain Basin. Projects may focus on land management practices, wastewater collectionltreatment systems (including structural changes in wastewater management), pollution prevention activities, and other creative activities to reduce direct or indirect discharge into the Basin. Proposed projects should be widely applicable across the Lake Champlain Basin with the likelihood of significantly reducing potential contaminant discharge to the Basin. Project creativity is considered during review, and the educational aspect of a project will receive particular emphasis for the next round of proposals. Applicants must demonstrate a lack of other funding. A 25 percent financial or in-kind-services match is required federal funds may not be used as a source for the matching funds. The applicant must prepare a final project report. Proposals should be developed for a 12-month time period.

Funding Parameters H Maximum Grant - $100,000 W Minimum Grant - no minimum H Total awarded in 1993 - $163,000 H Funds available next round -To be determined

Application Procedures Proposed projects are evaluated based on the following criteria: degree of

innovation and creativity in project design and implementation; ability of demonstrated projects to serve as a model for basin-wide application with opportunities to significantly affect potential sources of contaminants to Lake Champlain; likelihood that the project will be able to achieve the articulated

Applicant must obtain a request for proposals. The basic application (15 typed pages maximum, excluding supporting materials) should contain the following information: -

goals; and lack of potential eligibility for other State or Federal funding. -

H Narrative statement addressing the work plan scope, methodology, and

W A budget proposal describing proposed use of the Federal funds and anticipated results

the match

continued


W Recent resumes of principal and other investigators (as supporting

W Demonstration that proposed project not currently funded under

W Demonstration of plan to evaluate project success relative to stated

materials)

other Federalhtate programs

goals

Contact Information Terry Faber EPA Region I1 290 Broadway New York, NY 10007-1866 212-637-3698 phone

38 - Sources of P2 Financing

Section 4

Private Sector loans, loan Guarantees, and leasing -

Small and medium-sized companies should start with their local bank, with whom they have an ongoing relationship. For such businesses, banks have a strong preference for handling the range of a company’s financing needs.

Commercial Banks -

Banks generally offer a range of business lending programs, and some of the larger banks, including those operating on an interstate basis, often have small business lending specialists and may have special small business loan applications. Common types of lending for small and medium-sized businesses include: loans to purchase fxed assets (land and/or equipment), lines of credit, letters of credit, and commercial real estate loans. Fixed asset loans are the most relevant in terms of P2 project financing since such projects often require the purchase of new capital equipment. Lines of credit are loan amounts preapproved by a bank, which the lender can draw upon (often through writing checks) as needed and may also be used for P2 project financing.

Small and medium-sized companies should start with their local bank, with whom they have an ongoing relationship. For such businesses, banks have a strong preference for handling the range of a company’s financing needs (lines of credit, mortgage, equipment finance, etc.) rather than a single loan; it makes it more worth their while to have a loan officer become familiar with the company, and enhances the probability of financing. Moreover, it is advisable for business owners and/or managers to become familiar and build a relationship with their bank loan officer well in advance of actually applying for a loan.

Given the large number of banks throughout New England, and that most companies have ongoing relationships with one or more local banks, no individual banks are listed in this Guidebook. State Banking Associations, which maintain lists of member banks in each state, are listed in Appendix A, Referrals.

Commercial banks by and large do not distinguish financing opportunities by project type, e.g., P2 versus pollution control or regular equipment loan: Rather, the strength of a loan application is reviewed based on conventional considerations, such as creditworthiness of the firm and generation of sufficient cash flow to make required loan payments.

Loan terms - maximum amount, interest rate, fees, term and repayment schedule - vary by bank and should all be specified clearly prior to final approval of the loan. Application requirements for fured asset loans or lines of credit vary by bank, but most require at least the following:

W Completed loan application including type, amount and purpose of

Source and value of collateral Repayment plan Business financial statements (3 years historical, if available) or tax returns

w Projected financial statements (balance sheet, income statement, cash flow projections for 1-3 years)

4 Business and credit references Personal financial statement

W Other assets and liabilities

-

- loan

-

Private Sector Loans, Loan Guarantees, and Leasing * 39

While some banks may be most interestedin cash flow projections, by providing a set of inteqroted financial projections, a company can demonstrate a sophisticated understanding of its financial situation and add to the credibility of the loan application.

While some banks may be most interested in cash flow projections, by providing a set of integrated financial projections (balance sheet, income statement, and cash flow statement) a company can demonstrate a sophisticated understanding of its financial situation and add to the credibility of the loan application. Banks will generally consider the integrated financial projections most important when the cost of the P2 equipment purchase is large relative to the size of the company, it will have a major impact on the balance sheet, it is part of a significant change in the company’s business focus, or if the company is new. Such financial statements should be prepared by the company’s accountant. Many of these items may be included within a company’s business plan and can often be submitted in that format. See Section 5, below, for a more detailed description of standard financial data requirements.

As mentioned in Section 3, many commercial banks participate in and are the administrators for various SBA loan and loan guarantee programs. Each SBA program has specific lending criteria and application requirements as detailed in Section 3.

Different banks and loan programs have varying application and loan approval processes; they also have different documentation requirements. Generally, the process includes at least the following steps: 1) meet with a loan oficer; 2) submit a completed loan application and supporting documents; 3) review by bank; 4) negotiate specific terms of the loan; 5) receive a commitment letter from bank; 6 ) receive a “term sheet” from the bank, which provides the specific provisions or terms of the loan; 7) sign the loan agreement and related paperwork to document the loan (see below); and 8) book the loan (i.e. transfer the funds).

Loan documentation requirements typically include at least the following: a loan agreement describing the terms of the loan including any financial covenants; security agreement where the collateral for the loan (often the equipment to be purchased) is specified; guarantees that the loan will be paid back (for small businesses often personal guarantees by owners); and a promissory note providing evidence of the debt. Depending on the bank and the complexity of the financing, the loan agreement may also serve as the commitment letter and/or the term sheet. Borrowers should keep in mind that virtually all terms of a loan agreement are negotiable. It is therefore important to have the company’s attorney review all loan documentation prior to final agreement. The company’s attorney should not only be useful in helping to negotiate favorable terms, but should also ensure the terms of the loan are fully understood by management, and do not place undue con- straints or burdens on the company.

compliance and reporting requirements. For example, there may be limits placed on the overall debt to net worth ratio for the company, or the company’s cash flow to debt service ratio, or others. As part of these covenants, the borrower is required to provide the bank with regular reports (sometimes called compliance certificates) demonstrating its adherence to these requirements. The extent of these covenants and the frequency of reporting requirements depends on the size of the loan and nature of the company’s relationship with the bank. Typically, compliance reports are reviewed quarterly or annually, however in some cases monthly reporting may be required.

the size of a company’s relationship with the bank, the nature of the financing, and the complexity of the deal. For example, fees in the Capital Access program can be three percent or more of the total value of the loan,

- -

-

Loan agreements typically include financial covenants, which specify loan

-

-

The costs associated with obtaining financing (also negotiable) vary by

40 1 Private Sector Loans, Loan Guarantees, and Leasing

Equipment leasing or leasdpurchasing is another P2 project financing option companies may want to consider.

while other loan programs may be much less costly. In addition to direct application fees and interest rates, other costs an applicant should consider include accounting fees to prepare financial statements, legal fees to review documents, and the in-house labor time required to oversee the process.

Certified Development Corporations (CDCs) - A Certified Development Corporation (CDC) is a private nonprofit

company created to contribute to the economic development of a particular community or region. These entities work with SBA on various programs, particularly the 504 Certified Development Corporation Loan Program in the financing of small businesses. To administer the SBA program, CDCs must meet the following conditions:

-

__

W Operate in a defined geographic area W Consist of at least 25 members who are representative of the CDC’s

area of operation and represent government agencies, banks, businesses, and community organizations

W Provide full-time staff who are responsible for marketing the program and processing and servicing loans

W Develop a reliable source of funding W Contain a board of at least five directors who meet quarterly, one of

W State within its bylaws that its primary purpose i s to “promote and whom has commercial lending experience

assist the growth and development of business concerns in its operation area.”

In addition, CDCs must aid a minimum of two small businesses a year, provide at least ten percent of the necessary funds for each project, and ensure that the debentures are correctly closed and secured. These organizations must submit to SBA annual reports containing financial statements, management information, a full activity report, and an assessment of their assistance to small businesses. See Section 3 for more information on how to access the SBA 504 Loan Program. See the Referral Section, Appendix A, for a listing of CDCs.

Lease Financing Equipment leasing or lease/purchasing is another P2 project financing

option companies may want to consider. A lease is a contract that allows companies to gain use of equipment in exchange for payments over time. The lessor provides the financing; the lessee acquires the equipment. Leasing is a flexible but complex financing tool.

A typical arrangement is the finance lease, sometimes called a capital lease, a conditional sales contract or an installment-purchase agreement. With a finance lease, 100 percent of the equipment/project cost is amortized (i.e., paid for, with interest) over the term of the lease. Title to the project equipment passes to the lessee, while the lessor retains a first security interest in the equipment. The lease term varies but is typically three to seven years and in no cases can be longer than the useful life of the equipment.

Lease provisions may be stated in many different ways: with or without fees, with one or two advance payments or payments at the end of each period (Le., payments “in arrears”), and with varying end-of-term purchase options or buyout charges. Because of the many options available and the complexity of leasing agreements, before making a commitment we suggest businesses consult their accountants to get assistance in evaluating their lease and purchase options and the financial implications of a lease’s provisions.

_.

-

Private Sector Loans, Loan Guarantees, and Leasing 41

The economic rationale for the P2 project may include costsavings associated with the project from recycling and more efficient use of raw materials, waste disposal cost savings, lower energy or water costs, or improved production efficiencies.

A possible barrier to using lease financing for P2 projects is that some P2 equipment may have little collateral value. Such projects may contain a high proportion of installation, engineering and other “soft” costs and the equipment purchased may be affixed to buildings and other process equipment. For these reasons, the equipment may not be easily repossessed for resale at a price approaching its original acquisition costs.

The concern that P2 equipment lacks collateral value can be addressed, first, by demonstrating the company’s creditworthiness and ability to meet lease payments (see below), and, second, by outlining the economic rationale for the P2 project. In addition, equipment with similar characteristics to P2 equipment, such as energy efficient lighting fuctures and heatinglair conditioning systems, have been financed extensively by the leasing industry.

The economic rationale for the P2 project may include: W Cost savings associated with the project from recycling and more

- -

-

efficient use of raw materials, waste disposal cost savings, lower energy or water costs, or improved production efficiencies;

andlor

methods.

W Avoided costs of more expensive pollution control measures;

W Need to replace aged or obsolescent production equipment or

Leasing for a P2 project has direct financial consequences for the company. The costlbenefit information used in deciding to implement the project should be summarized and quantified for the prospective funding source. In some cases, the project’s savings may be sufficient to offset lease payments, resulting in immediate positive cash flow for the company. Also, in some cases the lease term can be extended, thus reducing annual payments, so that the project’s cost savings more closely match lease payments.

Typical information that is requested from the company to demonstrate creditworthiness for a lease is similar to that described above for commercial bank loans, and more challenging for a company less than three years old.

A firm interested in lease financing should ask relevant equipment vendors for information on such funding options or for referrals to other organizations with such programs. In some cases, the vendor may offer financing directly or through a subsidiary finance company. In other cases, the vendor may have a pre-established relationship with a funding source. These referrals can be valuable because the financier will already be familiar with the types of equipment needing financing and the issues associated with them. As mentioned above, a company considering the leasing option should consult its accountant before signing an agreement.

Notes 1 Some of the larger hanks do have “environmental lending” programs, but this generally refers to large pollution control projects, such as solid waste incinerators and landfills or wastewater treatment facilities. Such projects do not fall within the definition of pollution prevention and are not the focus of this guidebook. -

42 *Private Sector Loans, Loan Guarantees, and Leasing

Section 5

LoadGrant Application Forms and Procedures

Often a business plan is required especially for newly established companies, to help the lender understand the applicant’s business needs. The integrated financial statements are particularly important to lenders.

Standard Company and Project Financial Analysis -

Data Requirements -

Typical information that is requested from the company to demonstrate

Historical financial statements (balance sheet and income statement) for the last three years. Audited statements with appropriate footnotes are preferred; accountant-reviewed statements are second best and often adequate. The most recent interim, i.e., quarterly, management- prepared financial statements are helpful. Projected financial statements (balance sheet, income statement, cash flow statement) for 1-3 years. While some banks may be most interested in cash flow projections, by providing a set of integrated financial projections a company can improve the credibility of the loan application. Such financial statements should be prepared by the company’s accountant.

corporations, partnerships and sole proprietorships, personal financial statements and/or tax returns of the owner(s) are often required. Personal guarantees from the business owners typically will be requested. Bank and trade credit references. References and payment histories on other loans or leases are very helpful. Additional background information on the business, including years in business, marketing literature describing the business, services or products, market position and future outlook, key customers (if sales are concentrated), location (for retail businesses), and name of the company officer who can be contacted for further credit review.

companies, to help the lender understand the applicant’s business needs. It is also a useful tool for management. The process of generating a business plan forces management to focus on all aspects of the business enterprise and allows a more objective perspective. Emphasis should be placed on those elements that are necessary for the success of the business. In addition to the historical and an integrated set of projected financial statements, a business plan generally includes: a brief overview of the type of business, including information on products, services, location, markets, management, amount of financing needed, and estimated annual sales, as well as current financial data (source of equity capital, financing requirements). Business plans also often contain resumes of principals, product brochures, and contracts, letters of intent, agreements and other information relating to the proposed project.

The integrated financial statements are particularly important to lenders. The balance sheet reports the financial position of a firm at a particular time (e.g., end of year) and includes information on the firm’s economic resources (assets), economic obligations (liabilities) and the claims of owners and stockholders (equity). Lenders use the balance sheet to evaluate the liquidity and financial flexibility of the company. It also reflects the operating capabilities and the earning performance of the company.

creditworthiness includes: -

For small, closely-held and/or young firms, particularly Sub4

Often a business plan is required, especially for newly established

-

-

LoanlGrant Application Forms and Procedures * 43

In the lenders‘mind, it is important to have a client not only with a sound balance sheet, but also one who is responsible, knowledgeable, and organized, particularly regarding the firm’s financing needs.

The income statement reflects the results of operations for a reported period and should contain the profit and loss items recognized during the period. The lender uses the income statement to measure profitability and estimate the sensitivity of income to operating and economic factors.

The cash flow statement is derived from the balance sheet and income statement and indicates the amount and timing of both cash receipts and payments. Lenders use this information to assess the company’s ability to generate future cash inflows and pay debts, and is therefore an important tool for the bank‘s loan decision.

These three statements are used in combination to give an integrated picture of a company’s financial well-being. Full definitions are included in Appendix C, and a sample cash flow statement is included in Appendix B.

- -

-

Putting Your Best Foot Forward: Presenting Your Project to a Potential InvestorFunder

The process of obtaining project financing can seem demanding when potential lenders request extensive information about a business and its owners and place the operations of the business under intense scrutiny. Lenders usually have to make a choice between multiple financing opportunities, another factor that can make it difficult for a business to acquire project funds in a timely fashion. However, a business can enhance its chances of obtaining financing through proper preparation and presentation of its submission to the financing organization.

primarily on a company’s fiscal soundness, it is also important that the lender has a clear understanding of the business, its recent history and prospects, as well as the capabilities of its owners and senior managers. In the lenders’ mind, it is important to have a client not only with a sound balance sheet, but also one who is responsible, knowledgeable, and organized, particularly regarding the firm’s financing needs. These traits inspire confidence in the lender that the business is being responsibly managed and that the investment is in good hands. For these reasons, this section focuses on ways in which a business can enhance its chances of obtaining loans and/or grants. These methods are then illustrated through a hypothetical case study.

Although lenders base the decision to approve a financing request

Preparing Your Project Application and Presentation Before approaching lenders, the applicant should compile and evaluate

potential sources of financing to determine those that are the most compatible with the project. For example, if the project involves a highly-specialized process line with little opportunity for replication, it is unlikely that the project would receive funding through a pollution prevention demonstration grant from a state environmental office. These grants are often intended to fund industrial applications of pollution prevention technologies with the potential for broad applicationltransfer to other facilities. In order to ensure effective use of its resources, a company should review in detail the financing program descriptions, assess the probability of funding associated with each financing program, and apply only to those programs that seem to have at least a moderate probability of success.

Often lenders request a meeting with the prospective applicant during which they can discuss project specifics and application procedures. These discussions further aid the applicant in preparing an application, as well as aid the lender in an initial evaluation of the applicant’s organization and financial condition. Prior to the meeting, the applicant should attempt to anticipate the information needs of the lender. At a minimum, financial

__

44 * LoanIGrant Application Forms and Procedures

A convincing, organized and thoughtful presentation is an important asset in gaining the confidence ofthe lender.

statements (balance sheets, income and cash flow statements) for the most recent two or three years should be on hand. In addition, documents relating to project design and feasibility studies should be accessible for referencing. The information should be organized and clearly presented to favorably reflect the applicant’s management capabilities.

A convincing, organized and thoughtful presentation is an important asset in gaining the confidence of the lender. Further research into the potential financing organization can inform the applicant about the types of projects and industries with which the lender is familiar, thereby enhancing the presentation.

In addition to researching the lender’s financing history, the applicant should consider the motivations and goals of the lender. Throughout this Guidebook, various types of financing organizations have been discussed, ranging from state environmental agencies to commercial banks to equipment leasing companies. The applicant should present the project so that the lender can understand how the loan will further its own goals, whether that is demonstration of a pollution prevention technology, full repayment of a loan or job creation. Commercial banks and capital access pools are principally interested in achieving a return on their investment, whereas state environmental agencies are typically interested in preventing pollution or demonstrating the means to prevent pollution. The motivation of each lending organization should be assessed so that the applicant can tailor the funding application’s emphasis and selling points.

Thus, in talking to a commercial lender, for example, one should describe the project in terms of cash flow and rate of return. A state environmental office, on the other hand, should be approached using environmental and/or pollution prevention language.

Once the presentation encompasses the goals, history and language of the lender, the applicant should consider informational needs. If the financing organization does not typically focus on the applicant’s industry or industrial process, then it may hesitate in the face of an unknown risk. The applicant should be prepared to explain what the market is for the product or process and its status (e.g., is it expanding? stable?). He or she should be able to discuss the direction in which the industry is moving and what pressures it is facing (e.g., environmental regulations and strong competition). A moderate amount of information on products and processes may be useful to lenders who are interested in evaluating how the project under consideration will affect efficiency and costs. However, it is important to keep in mind the lender’s motivation and not to inundate the lender with unnecessary detail.

__ -

-

Case Study: Golden Tone Harmonics A hypothetical example helps to illustrate the suggestions in the previous

section. Golden Tone Harmonics (GTH, Inc.) is a small manufacturing firm in the northeastern U.S. that manufactures gold-plated harmonicas. After

process line that recovers excess gold and process water for re-use within the plating process. The necessary equipment costs $100,000, but the company expected to save roughly $35,000 annually on raw material costs. The firm’s accountant performed a profitability analysis of the project and concluded that the metal recovery and process water recycling system would be a profitable investment for the company.

Unfortunately, the firm did not have all of the funds available for the necessary capital investment and decided that they would need an $80,000 term loan. Therefore, the firm’s process engineer and the firm’s financial manager got together and searched through a guidebook of pollution

performing a feasibility study, GTH management decided to install a new -

-

LoadGrant Application Forms and Procedures * 45

prevention financing for funding options. After some discussion, GTH chose to apply to the following three potential funding sources: 1) a commercial lender, Le., a bank (loan); 2) a SBA-guaranteed Certified Development Corporation (loan); and 3) the state pollution prevention office (100 percent matching grant). Because each of these entities is interested in financing the project for different reasons, they decided to generate an application and/or presentation specific to each organization.

First, GTH approached the commercial bank. To the lending officer at the bank, the GTH engineer emphasized how the new process line would increase the efficiency of the production process by conserving raw materials and water. GTH’s financial officer asserted that this investment would enhance the firm’s flexibility to respond swiftly to changes in environmental regulations and, thus, aid the firm in remaining competitive. They decided not to focus on the pollution prevention aspects of the project. Instead they focused on how this investment will keep GTH, Inc. on top, and emphasized the project’s financial return.

GTH, Inc. would be required to complete a small business loan application that requests information on ownership, business and credit references, information on suppliers and customers, financial statements for the past three years, projections and monthly cash flow, as well as personal financial information for each principal owner. Throughout the process of compiling this set of information, GTH received assistance from the loan officer. GTH, Inc. submitted a complete application to the bank for consideration.

Next, GTH focused on the Certified Development Corporation (CDC). In a meeting with the CDC loan officer, GTH management emphasized that the company is a “small business” as defined by SBA, and described the difficulties that the firm has had in obtaining financing through traditional channels. GTH explained that they are currently applying for a matching grant that could significantly reduce the amount the company is seeking to borrow. The presentation focused on the potential for growth that the firm would be able to access with the increased cash flow, due to substantially lower raw materials costs after project implementation. GTH made a strong case for the firm’s fiscal stability and ability to repay the loan. Again, GTH management decided not to focus on the reduction in pollution that would ensue from the new process line, but concentrate on the economic benefits to the company and the company’s ability to make loan payments.

The CDC requested a set of information from GTH, Inc. similar to that required by the commercial bank. The loan officer explained both the CDC and the SBA procedures and timeline. The CDC loan officer provided GTH with assistance in preparing the necessary information.

Finally, GTH approached the state environmental agency. During a meeting with the agency’s pollution prevention personnel, GTH management discussed the potential of the project to serve as a demonstration of this type

engineer emphasized the raw material loss and ensuing waste generated by the current plating process, and the potential for environmental improvement that would result from the project. GTH’s financial manager described the firm’s plan to match the grant 100 percent through a loan, and mentioned the need to demonstrate proven prevention technologies that also generate good economic return. For this audience, GTH focused on the environmental effects of the project and the potential for transferring the technology to others in the plating industry with less emphasis on the issue of project profitability.

-

-

-

The loan officer informed them of the bank‘s application procedures.

of technology to other plating establishments. The company’s process -

__

46 * LoadGrant Application Forms and Procedures

Only apply to those funding programs that are compatible with the proposed project and thatseem at least moderately probable.

The matching grant program required the completion of a brief application that includes the following information: 1) problem addressed by this proposal, 2) description of proposed project with a schedule of activities, 3) list of potential contractors, consultants and suppliers for the project, 4) quantitative description of expected results of the proposed project, and 5) a project budget. The pollution prevention specialist informed GTH that its application would be evaluated by a review committee and that they could expect a decision in about one month.

organizations’s motivation and incorporated these concerns into both the written application and their presentation. GTH management attempted to modify application language and focus to best suit the audience. They arrived at each meeting with an organized presentation and documented important information about the company and the project beforehand.

- __

In these examples, the project team was aware of each financing

-

Application Requirements In addition to making a good impression on a prospective lender,

applicants must provide financial data to aid the lender in its evaluation. The application requirements vary significantly from program to program. Application for demonstration project grants are typically short in length and although some financial information about the company is requested, it is often minimal. Commercial bank loan applications, however, require detailed financial information. See Appendix B for a sample application and pro forma monthly cash flow. Specific application requirements are listed in the one-page descriptions in Section 3 or are available directly from the program contacts.

Summary Applicants should remember the following when applying for funding:

Gather information about the historical lending practices of the potential funding source to further assess the compatibility of the funding program and to highlight information gaps. Only apply to those funding programs that are compatible with the proposed project and that seem at least moderately probable. Consider the motivation of the funding source when preparing the presentation and application materials. Describe the proposed projects in a language with which the potential funding program is familiar.

m Anticipate the information needs of the potential funding programs and present the material in a clear and organized fashion.

With these in mind, businesses may be more able to access potential sources of financing for purposes of growth and environmental improvement.

LoanlGrant Application Forms and Procedures * 47

48 * LoadGrant Application Forms and Procedures

Appendix A

Sources of Information on Related Topics This section contains information on additional programs, organizations

and resources that were identified during the research for this Guidebook. It is not meant to be a comprehensive listing, but serves as a starting point. It includes listings of environmental, energy and generic financing programs; financing and technical assistance organizations; and other resources pertaining to financing, financial analysis, pollution prevention and other facets of business.

- -

-

Financing Programs

Financing Programs Related to Broad Environmental Issues CT

ME

W Environmental Clean-up Fund -loans up to $200,000 for small

W Occupational and Safety Loan Fund Program -loans up to businesses. Phone: 203-522-3730.

$50,000 for improving workplace safety. Phone: 207-623-FAME.

Financing Programs Related to Energy Federal Department of Energy, Energy-Related Inventions - average

NH W Governor's Office of Energy and Community Services - grants award = $70,000. Phone: 301-975-2000.

up to $10,000. Phone: 603-271-271 1 or 800-852-3466.

Financing Programs Related to New Technologies/"Green"Products Federal W Small Business Innovation Research Program - grants from

CT W Product Development Financing Program -loans from

ME W Pine Tree Partnership Grant Program - matching grants up to

RI m Applied Research Program -grants fund 60 percent of project.

$50,000 to $500,000. Phone: 202-205-7777.

$100,000 to $1 million. Phone: 203-258-4305.

$15,000. Phone: 207-623-FAME.

Phone: 40 1-277-2601.

Generic Financing Programs Federal W Farmer's Home Administration - loan guarantees. Contact your

CT Connecticut Development Authority - loans and loan

W Connecticut Works Loan Guarantee Program.

W Investment Finance - direct loans and investments, up to

state office.

guarantees. Phone: 203-522-3730.

Phone: 203-258-7822.

$500,000 for businesses relating to high-tech companies with strong job growth. Phone: 203-522-3730.

Phone: 617-536-3900.

exempt bonds, revolving loans. Phone: 617-451-2477.

-

- MA W Massachusetts Capital Resource Company - loans.

W Massachusetts Industrial Finance Agency - taxable and tax- I

Appendix A Sources of Information on Related Topics - A-1

ME

NH

RI

VT

W Department of Economic and Community Development - several loan programs. Phone: 207-287-2656.

1 Finance Authority of Maine - loan insurance and loan programs. Phone: 207-623-3263.

H Industrial Research Center - funds technical assistance up to 50 percent. Phone: 603-862-0123.

W NH Business Finance Authority - loan guarantees. Phone: 603-271-2391.

H New Hampshire Business Development Corporation -loans from $50,000 to $750,000. Phone: 603-623-5500.

W Institute for Cooperative Community Development - loans from $500 to $10,000. Phone: 603-644-3103.

H Concord Regional Development Corporation - direct loans from $250,000 - $1.8 million. Phone: 603-228-1872.

H New Hampshire Industrial Development Authority - tax-free industrial development revenue bonds and guaranteed loans. Phone: 603-271-2591.

programs. Phone: 401-277-2601.

Bond and Mortgage - bond and mortgage programs. Phone: 401-277-2601.

W R.I. Partnership for Science and Technology - grant and loan programs. Phone: 401-277-2601. Business Development Company of Rhode Island - loans between $lOO,OO to $600,000. Phone: 401-351-3036.

W Rhode Island Department of Economic Development - taxable and tax-exempt bonds, small business loans, applied research grants. Phone: 401-277-2601.

W Ocean State Business Development Authority - loan guarantees from $250,000 - $2 million. Phone: 401-277-2601.

H Vermont Economic Development Authority - bonds and direct loans. Phone: 802-223-7226.

W %ode Island Industrial Facilities Corporation - bond

W Rhode Island Industrial-Recreational Building Authority, Insured

Financing Programs Related to Tax Incentives/Credits/Exemptions CT W Pollution Control Equipment Tax Exemption - sales, use, and

property tax exemptions plus corporate tax credits for pollution control equipment investments. Maine Seed Capital Tax Credit Program - income tax credits for investors. Phone: 207-623-FAME. Investment Tax Credit for Waste Reduction, Reuse, and Recycling -income tax credit on equipment. Phone: 207-287-5300 or 800-662-4545.

ME

-

A-2 *Appendix A Sources of Information on Related Topics

Organizations

Certified Development Corporations (CDCs) CT

ME

MA

NH

VT

W Connecticut Business Development Corporation.

W Androscoggin Valley Council of Governments. Serving Phone: 203-522-3730.

Androscoggin, Oxford and Franklin Counties. Phone: 207-783-9186.

W Coastal Enterprises, Inc. Serving southern, midcoast and central areas and, under some limitations, statewide. Phone: 207-882-7552.

W Eastern Maine Development Corporation. Serving Hancock, Knox, Penobscot, Piscataquis, Waldo and Washington Counties. Phone: 207-942-6389.

W Lewiston/Auburn Economic Growth Council. Serving Lewiston and Auburn. Phone: 207-784-0161.

W Northern Maine Regional Planning Commission. Serving Aroostook County. Phone: 800-427-8736 (for ME residents only) or 207-498-8736.

Phone: 6 17-350-8877.

Grafton, Merrimack and Sullivan Counties. Phone: 603-228-1872.

W Granite State Economic Development, Inc. Serving all NH counties. Phone: 603-436-0009.

W Northern Community Investment Corporation. Serving Carroll, Coos and Grafton Counties. Based in northern Vermont and serves northern New Hampshire and northern Vermont. Phone: 802-748-5101.

W Tri-County Economic Development Corporation. Serving Greater Manchester. Phone: 603-436-0009.

W Northern Community Investment Corporation. Serving Caledonia, Essex and Orleans Counties. Phone: 802-748-5101.

- __

-

W Massachusetts Certified Development Corporation.

W Concord Regional Development Corporation. Serving Bellknap,

Banking Associations CT ME

MA NH RI VT

W Connecticut Bankers Association. Phone: 203-527-5161. W Maine Bankers Association. Phone: 207-622-6132. W Maine Association of Community Banks. Phone: 207-79 1-8400. W Massachusetts Bankers Association. Phone: 617-523-7595. W New Hampshire Bankers Association. Phone: 603-224-5373. W No active association in Rhode Island. W Vermont Bankers Association. Phone: 802-229-0341. -

Small Business Development Cen ters CT

ME

MA

W Connecticut Small Business Development Center, John P.

W Maine Small Business Development Center, Chuck Davis.

W State Office, John Ciccarelli. Phone: 413-545-6301. W Western Massachusetts Regional Office, Dianne Fuller Doherty.

- O’Connor. Phone: 203-486-4135.

Phone: 207-780-4420.

Phone: 413-737-6712.

Appendix A Sources of Information on Related Topics * A-3

NH

RI

VT

W Central Massachusetts Regional Office, Laurence Marsh.

W Southeastern Massachusetts Regional Office, Clyde Mitchell.

North Shore Regional Office, Frederick Young. Phone: 508-741-6343. W Metro Boston Regional Office, John McKiernan.

W Main Office, University of New Hampshire, Helen Goodman.

W University of New Hampshire, Katherine M. McCormick.

W Plymouth State College, Janice B. Kitchen. Phone: 603-535-2523. W Keene State College, Richard W. Gorges. Phone: 603-624-2000. W Regional Manager, Robert T. Ehberson. Phone: 603-624-2000. W Regional Manager, Elizabeth A. Matott. Phone: 603-444-1053.

Nashua Chamber of Commerce, Kathleen M. Durnin.

International Office. Phone: 603-334-6074. W State Office, Douglas Jobling. Phone: 401-232-61 11. W Training Office, Sue Barker. Phone: 401-232-6115. W Downtown Providence, Erwin Robinson. Phone: 401-831-1330. W Aquidneck Island Office, Cheryl Faria. Phone: 401-849-6900. W University of Rhode Island Office, Thomas Policastro.

Community College ofRI Office, Judith Shea. Phone: 401-232-6407. W Export Assistance Center, Raymond Fogarty or Maureen Mezei.

W State Office, Norris Elliott, Phil Smith or Stephen Paddock.

W Southwest, Linda Aines. Phone: 802-773-3349. W Northeast, Joseph Wynne. Phone: 802-748-5512.

Southeast, Norbert Johnston. Phone: 802-257-7967. W Central, Lois Frey. Phone: 802-888-4972.

Phone: 508-793-7615.

Phone: 508-673-9783.

Phone: 6 17-552-4091.

Phone: 603-862-2200.

Phone: 603-743-3995. -

Phone: 603-891-2471.

Phone: 401 -792-245 1.

Phone: 401-232-6407.

Phone: 802-878-0181.

State Small Business Administration Offices CT ME MA NH RI VT

W US SBA, Connecticut. Phone: 203-240-4700. W US SBA, Maine. Phone: 207-622-8242. W US SBA, Massachusetts. Phone: 617-565-5591. W US SBA, New Hampshire. Phone: 603-225-1400. W US SBA, Rhode Island. Phone: 401-528-4571. W US SBA, Vermont. Phone: 802-828-4422.

State Technical Assistance Programs CT W ConnTAP, Robert Brown, Phone: 203-241-0777.

W Department of Environmental Protection, Office of Pollution Prevention, Mary Sherwin. Phone: 203-566-5217.

W Department of Environmental Protection Pollution Prevention Program, Ann Pistell. Phone: 207-287-7881.

W Maine Waste Management Agency, WasteCAP. Phone: 207-287-5300.

ME

A-4 Appendix A Sources of Information on Related Topics

MA W Office of Technical Assistance for Toxics Use Reduction.

W Massachusetts Toxics Use Reduction Institute.

W Department of Environmental Protection, Bureau of Waste

Phone: 617-727-3260.

Phone: 508-934-3275.

Prevention, Walter Hope. Phone: 617-292-5982.

Phone: 603-271-2956 or 800-273-9469 (in NH only). W Business and Industry Association, WasteCAP of New

Hampshire. Phone: 603-224-5388. W Small Business Technical Assistance Program, Rudolph Cartier, Jr.

Phone: 603-271-1370. W Rhode Island Pollution Prevention Program,

Phone: 401-277-3434. W Narragansett Bay Commission Pollution Prevention Program.

Phone: 401-277-6680. W Vermont Pollution Prevention Division. Phone: 802-241 -3888. W Retired Engineers and Professionals (REAP).

- NH W New Hampshire Pollution Prevention Program, Paul Lockwood. __

___

RI

VT

Phone: 802-223-2345.

Other Organizations W Small Business Association of New England (SBANE) -

W Associated Industries of Massachusetts (AIM).

W Connecticut Business and Industry Association, Inc. (CBIA).

W New Hamphshire Business and Industry Association (NHBIA).

W Associated Industries of Vermont. Phone: 802-223-2345.

a membership organization. Phone: 617-890-9070.

Phone: 800-470-6277.

Phone: 203-244- 1900.

Phone: 603-224-5388.

Informational Resources

Databases Pertaining to Financing Programs U.S. EPA New England Region, Research Library for RCRA - two databases

of financing programs, some of which are available to for-profit organizations. Contact Fred Friedman. Phone: 617-573-9687.

U.S. EPA, Environmental Financing Information Network (EFIN) - contains abstracts of relevant documents and lists of contacts. Phone: 202-260-0420.

Preparation of Financial Statements Brealey, R.A. and S.C. Myers, Principles of Corporate Finance, 4th edition,

Costales, S.B. and Geza Szurovy, The Guide to Understanding Financial

Ross, S . R. Westerfield and J.F. Jaffe, Corporate Finance, 3rd edition, Irwin

Simini, Joseph Peter, Balance Sheet Basicsfor Nonfinancial Managers, John

Woelfel, Charles J., Financial Statement Analysis, Probus Publishing Com-

McGraw Hill, Inc., New York, 1991.

Statements, McGraw-Hill, Inc, New York, 1994.

Publishers, Burridge, IL, 1993.

Wiley & Sons, New York, 1990.

pany, Chicago, 1994.

Appendix A Sources of Information on Related Topics * A-5

Financial Analysis of Pollution Prevention American Institute for Pollution Prevention, A Primerfor Financial Analysis of

General Electric Corporate Environment Programs, Financial Analysis of

Northeast Waste Management Officials’ Association and The Massachusetts

Pollution Prevention Projects, April 1993.

Waste Management Alternatives, 1987.

Office of Technical Assistance, Improving Your Competitive Position: Strategic and Financial Assessment of Pollution Prevention Projects, Training Manual and Instructor’s Guide, 1994.

Tellus Institute, Risk Analysis Group, “Alternative Approaches to the Financial Evaluation of Industrial Pollution Prevention Investments”, November 1991.

Tellus Institute, Risk Analysis Group, “Total Cost Assessment: Accelerating Industrial Pollution Prevention Through Innovative Project Financial Analysis With Applications to the Pulp and Paper Industry”, December 1991.

- -

-

Pollution Prevention Freeman, Harry M., Industrial Pollution Prevention Handbook, McGraw-Hill,

Northeast Waste Management Officials’ Association, “Guide to State Inc., New York, 1995.

Pollution Prevention Technical Assistance Programs in the Northeast”, December 1993.

Northeast Waste Management Officials’ Association, “A Practical Guide to Pollution Prevention in the Northeast”, January 1993.

US EPA Hazardous Waste Engineering Research Laboratory, Waste Minimiza- tion Opportunity Assessment Manual, July 1988.

US EPA Oftice of Research and Development, Facility Pollution Prevention Guide, May 1992.

US EPA Region I, “Pollution Prevention Technical Assistance Information”, December 1992.

A-6 * Appendix A: Sources of Information on Related Topics

Appendix B

Sample Application Forms and Cash Flow Forecast This appendix contains two sample application forms, one for a private

bank and one for a state technical assistance program, followed by a sample cash flow forecast for our hypothetical case study, Golden Tone Harmonics. The format of the sample forecast is based on The “Business Planning Guide” for the Bank of Boston and Financial StutementAna&s by Charles J. Woelfel was a primary source of information. Note that there are many acceptable formats used by lending institutions and businesses. What is most important to a prospective lender is that the information provided is clear, comprehensive and consistent.

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Appendix B Sample Application Forms and Cash Flow Forecast * B-1

S M A L L B U S I N E S S L O A N A P P L I C A T I O N

Are you presently a customer of the Banh? How long have you been a customer? At which branch do you banh?

Business name

Business address

Business telephone Tax identif ication number

Nature of business Annual sales $

Year established Total employees Do you own or lease If you lease, who your place of business? i s the lanqlord?

Type of business: 0 Proprietorship 0 Limited Partnership

0 C Corporation 0 Trust

0 S Corporation 0 Not-For-Profit

0 General Partnership 0 Professional Corporation

0 Other

Type of loan product: 0 Line of Credit Term Loan 0 Letter of Credit 0 Owner Occupied Real Estate Mortgage

s Amount requested Term (in months)

How wi l l your business use the loan?

How wi l l your business repay the loan?

What w i l l your business offer as collateral? $ $ What is i t s net book value? What i s your opinion of market value?

Is there documented value for the proposed collateral, such as a recent purchase agreement, invoice, appraisal, or tax assessment? 0 Yes 0 NO

Date $ Documented amount

Describe any existing liens or loans on the proposed collateral.

Describe the terms of sale of your hey suppliers.

Describe ti le terms of sale you offer t o your customers.

Is your business cash flow subject t o major variations as the result of seasonal or other factors? 0 Yes 0 NO

Source of documented amount (if an appraisal, please enclose a COPY)

~~

If yes, please explain

Years, , 1 Name %Ownership Title ill POSltlOn

I 1. I I : -

DepOSitOry bank Type of account Account number Rverage balance Contact Telephone

2. 3.

1. $

Secured or Original Monthly Current Maturity Interest tender Loan purpose unsecured amount payment balance date rate %

2 . 3.

1. $ $ $

Largest suppliers Product Averaga annual purchases Contact Telephone 1. $ 2.

Largest customers Product Average annual sales Contact Telephone

2. 1. $

On whom do YOU rely for professional services?

Accountant

insurance agent

Name CityIState Telephone

Attorney

Is your business an endorser, guarantor or co-maker of any Obligations not l isted on the financial statements? 0 Yes NO I f yes, what i s the total contingent l iabi l i ty? $ Is your business a party to any claim or lawsuit? 0 Yes 0 NO Has your business ever declared bankruptcy? U Y e s 0 NO Are your payroll, federal, state and property taxes current? 0 Yes 0 NO Please provide necessary explanations:

Each person who signs below (the "Signer") certifies to the Bank that the information fi l led in above and in any accompanying documentation is true, comple accurate, and that each Signer wi l l promptly notify the Bank of any material changes to such information. Each Signer authorizes the Bank from time to time to I any references relating to the applicant or the Signer the Bank deems necessary or appropriate without notice to the Signer. The proceeds of the loan applied for used for business purposes and not for personal, family or household purposes. This application and any accompanying documentation remain the Bank's property.

Signed Title Date

Signed Title Date

FOR BANK USE m

P A R T 1 - P E R S O N A L P R O F I L E

Name Social security number

Address Occupation

Business name Business address

Length of employment Residential telephone Business telephone

Previous employer CitylState Contact Telephone

P A R T 2 - P E R S O N A L F I N A N C I A L P R O F I L E A S O F

It assets are jointly held, please check the appropriate boxes and the ioint owner also should Sign this statement

ASSETS IROUNO NUMBERS TO NELIREST 1,000)

Cash ( th is Bank) Cash (other f inancial institutions-identify)

Marketable securities (total schedule A) Non-marketable securities Real estate market value (total schedule B) Accounts, loans and notes receivable Retirement accounts (vested portion) Life insurance-cash surrender value Only

Automobiles Other assets (please itemize)

Check if joinllyowned

$ 0 U

0

0 3 . 0 TOTAL ASSETS $

LIABILITIES (ROUIIO NUMBERS70 NEAREST 1.000)

Mortgage amounts owed (total schedule B) Other loans (total schedule C) Credit cards (please itemize) 1. 2.

3. Other accounts, leases and bi l ls due

I . 2. 3. Unpaid income orother taxes and interest

TOTAL LlABlLlTlES

WET WORTH

TOTAL LIABILITIES AH0 NET WORTH

P A R T 3 - P E R S 0 N A L I N C 0 M E A N D E X P E N S E S (For the year ending )

ANNUAL INCOME ANNUAL EXPENSES

Annual salary, bonuses and commissions Dividends and interest Rental income (total schedule B) You need not l is t alimony, child support or Separate maintenance income ifyou do not

wish to have it considered. Other Income TOTAL ANHUAL INCOME

Number of dependents Ages

Mortgagelrental payments $ Real estate taxes Federal, state and local taxes Insurance premiums Other loans, credit cards, etc. Alimony, child support, maintenance Other expensesltuition

DO YOU have any contingent l iabil i t ies? (For example, as endorser, co-maker, guarantor or as the result of legal actions or contested taxes)

TOTAL ANWUAL EXPENSES t

Please describe

I P A R T GENERAL I N F O R M A T I O N

If you answer yes to any of these questions, please provide details.

Have you ever had a repossession? Yes 0 NO 0 a minor t raf f ic violation? Yes 0 No 0 Have you or your business ever declared bankruptcy? Yes 0 (Note Havingdeclared bankruptcydoes not automatically disqualify you from obtaininga loan.) Details:

Have you ever been convicted Of or pleaded guilty to a criminal offense, other that

At th is t ime are you i n default under any loans, leases or any other instruments to which you are a party or legally bound? Yes 0

NO 0 No 0

Schedule A. Marketable Securities (Government Securities, Stocks and Bonds-or attach listing)

Number Market value Total market value of shareslunits Description In name of par sharelunit of securities Pledged as collateral?

$ $ YesU N o 0 Y e s O N o 0

Y e s 0 N o 0

Total $ I Schedule B. Real Estate

Address (street, city and state)

Resid en c e.

Tit le in the nameof %Owned

Date Tax assessment acquired Cost value

Property #3.

Estimated Mortgage market value amounts owed

Residence. $ $

Account number

Mortgage held by

Maturity date

Property #3.

Calculation of net rental income before mortgage payments: Total $ I Total $ 1

Annual rental Taxes & Other Net rental income income (minus) insurance (minus) cash expenses (equals) before mortgage payments

property#^. $ $ $ Property #3.

Total$ I

Lendei

Schedule C . Other Loans

Date Original amount of Current balance Monthly Secured Final of loan loan or line of credit outstanding payment or unsecured? maturity

Total $ I Schedule D. Businesses

Other businesses in which you are an ownerlprincipal, officer or director % Owned Positionltit le Type of business of business Year established

Total assets

Each person Who Signs below ( the "Signer") certif ies to the Bank that the information fi l led i n above and i n any accompanying documentation i s true, complete and accurate, and that each Signer w i l l promptly notify the Bank of any material changes to such information. Each Signer authorizes the Bank to collect information relating to the Signer from t ime to time, including, but not l imited to, consumer reports from consumer reporting agencies. If the Bank takes an adverse action relating to a business credit application in whole or in part because of information about any Signerls) (including, but not l imited to, information contained in a consumar report), each Signer authorizes the Bank to notify the company or other business entity which has applied to the Bank for a loan of such fact. This Personal Financial Statement and any accompanying documentation remain the Bank's property.

Signature Date Name

Date of birth Signature Date- Check relationship to business applicant: 0 Owner

Joint owner of assets Social security number

0 Non-owner guarantor Check relationship to business applicant: 0 Owner 0 Non-owner

S M A L L B U S I N E S S I N F O R M A T I O N W O R K S H E E T

The information requested below is optional if your credit request is less than $250,000, but it would assist us in

understanding your business. Replies are encouraged to be brief. If some of this information is covered by a business plan,

company literature or resume which you already have available, please feel free to include this material.

Please provide a brief histoly of your business and describe your products andlor Senices

If you have been in business for less than five years, please summarize your previous business experience.

What do you feel are two main strengths of your business? Consider, lor example, management experience, competitive advantages, customer loyalty, financial resources. or any other aspects.

What are the key rishs or challenges in your business and how do you manage against them?

Whatareyour plansforthe businessinthenexttwoyears?

Is there anything elseabout your business you would lihe usto know? Forexample, hasthenatureof your businesschanged recently?

If there have been difficulties in the past in your personal or business credit history, you may explain them here.

Business name

Prepared by.

YOUR LOCAL BANK

Introduction T h e historical and projected cash flows of a business are often important to the bank’s credit decisions. By cash flow, we mean the amount and timing of the cash receipts and cash payments. For example, a sale which creates an account receivable does not add to cash flow until rhe receivable is collected. Similarly, disbursements for inventory, expenses and taxes reduce the cash balance in the month they are actually paid. Taken together, positive and negative monthly cash flows may show when loans are needed and how they will be repaid. This type of analysis should be helpful to both your business and the bank.

Instructions On the reverse side of this page is a format we find helpful co analyze cash flow. You may use lined accounting paper or a compucer spread sheet to complete the projection. We welcome alternative formats as well if you have one you are using.

If you would like to use our format, the following explanations may be helpful.

Line 1 Cash On Hand: An estimate of your bank account balance at the beginning of each month as carried forward from Line 8 in the previous month.

L i n e 2 Total Cash Receipts: T h e sum of cash received in each month from cash sales, the collection of accounts receivable, and other sources such as tax refunds.

Line 5 Cash Flow, Positive or Negative: The net effect of one month’s operations on the business cash position before loan cransactions. If positive, a loan payment mav occur. If negarive, a loan advance may be necessary.

Line 9 Credit Line Position: T h e end of che month loan balance after all loan advances and payments to date.

Key Assumptions Please list on a separate sheet the major assumptions affecting the underlying sales forecast, the timing of large cash flows (positive or negative), w other predictions.

If we can be of further help, please telephone us at the number listed in our Small Business Loan Application.

APPLICATION FORM IKATCHING CHALLENGE GRANTS

Part A

ORGANIZATION: - ADDRESS : __

PHONE :

PRIMARY CONTACT: TITLE

RESPONSIBLE PROJECT MANAGER: TITLE (If Different)

SPONSORING

-

ORGANIZATION: (If Different )

ADDRESS :

PHONE :

PROJECT PERIOD: months

CHWMS FUNDS REQUESTED $

APPLICANT MATCH CONTRIBUTION $

TOTAL PROJECT BUDGET $

Please check here to indicate that financial reference is attached.

Please check here to indicate that the proposed project is not required by the CT Department of Environmental Protection (DEP) or the U.S. Environmental Protection Agency (EPA).

I certify that, to the best of my knowledge and belief, the information contained in this application is true. -

Signature Date -

Name Title

Office Use Only: Application number: Date received:

Part 0

Provide the following information:

1. Briefly state the problem addressed by this proposal.

.-

2. Outline the proposed grant project. (See form on next page).

2. (cont ) Schedule of Grant Project Activities

Tasks Month Month Month

1 I 2 3 Month

4 Month Month 5 6

3. List the names of contractors, consultants and suppliers necessary to pursue the proposed project.

4. Quantify the expected results and potential benefits of the grant project.

5. Project Budget

Direct Labor: Job Title Pay Rate Hours

Source of Funds ADDlicant Grant

Purchase of Materials/Supplies:

Equipment Rentals:

Laboratory Analyses:

Professional and Consulting Services (Complete a separate budget form for each consultant):

Other Expenses (Please specify):

Total C o s t of Project $

Source of Funds $ $

6. Consultant/Contractor Budget

Name:

Address :

Contact:

Phone :

Direct Labor: Job Title

cost - Pay Rate Hours

$

Laboratory Analyses:

Other Expenses (Please specify):

Total Cost $

Monthly Cash Flow Forecast

Cash On Hand

Total Cash Receipts

Total Cash Available

Cash Paid Out Payments to Vendors Gross Wages Other Payroll Expenses Outside Services Supplies Repairs and Maintenance AutoIDeliverylTravel Accounting and Legal Rent Utilities Insurance Interest Income and Property Taxes Other

Subtotal

Fixed Asset Purchases Other Start-up Costs Other Time Loan Payments Escrow Payments Owners' Withdrawals Other

Total Cash Paid Out

Cash Flow

Term Loan Payment'

Term Loan Advance'

Ending Cash Position

Golden Tone Harmonics, Inc. 1995

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 40,000 20.950 42,950 58,711 42.583 73,217 99,361 97,367 126,033 146,711 118,950 131.850

125,000

165,000

45,000 60,000 6,000 200 500

0 2,400 600 200 0

9,150

124,050

100,000

224,050

(59.0501

80.000

20,950

127,500

148.450

33,000 60,000 6,000 200 500

600 2,400 600 200 667

104,167

104,167

44,283

1,333

42,950

132,500

175.450

44,000 60,000 6.000 200 500

250 600

2,400 600 200 656

1 15,406

1 15,406

60,044

1,333

58.71 1

1 1 5.000

173.71 1

49,500 60,000 6,000 200 500

600 2,400 600 200 644

9,150

129.794

129,794

43,917

1,333

42.583

140,000

182,583

37,500 60,000 6,000 200 500

2,400 600 200 633

108.033

108.033

74,550

1,333

73,217

130.500

203,717

32,000 60,000 6,000 200 500 500

2,400 600 200 622

103,022

103,022

100,694

1,333

99,361

128.500

227,861

29,500 60,000 6,000 200 500

2,400 600 200 61 1

9,150

109,161

20,000

129,161

98,700

1,333

97,367

134,000

231,367

33,500 60,000 6,000 200 500

2,400 600 200 600

104,000

104,000

127.367

1,333

126,033

130,500

256.533

38,000 60,000 6,000 200 500

2,400 600 200 589

108.489

108,489

148.044

1,333

146,711

137.500

284.21 1

45,500 68,000 6,800 200 500

2,400 600 200 578

9,150

133,928

30,000

163,928

120.283

1,333

118,950

149.500

268,450

56,000 68,000 6,800 200 500

2,400 600 200 567

135,267

135.267

133.1 83

1,333

131,850

159,900

291,750

58,000 68,000 6,800 200 500

650

2,400 600 200 556

137,906

30,000

167,906

123,844

1,333

122,511

* Five-vear loan at 10%.

Appendix C

Glossary of Financial Terms Annual Cash Flow

Amortization

Assets

Balance Sheet

Bond

Break-Even-Point

Capital Budget

Cash Flow Statement

Collateral

Construction Loan

For an investment, the sum of cash inflows and outflows for a given year (see cash flow). To liquidate on an installment basis; the process of gradually paying off a liability over a period of time, i.e., a mortgage is amortized by periodically paying off part of the face amount of the mortgage. The valuable resources, or properties and property rights owned by an individual or business enterprise. An itemized statement that lists the total assets and the total liabilities of a given business to portray its net worth at a given moment in time. Any interest-bearing or discounted government or corporate security that obligates the issuer to pay the bondholder a specified sum of money, usually at specific intervals, and to repay the principal amount of the loan at maturity. Bondholders have an IOU from the issuer, but no corporate ownership privileges, as stockholders do. The point at which cumulative incremental annual cash flows of an investment aggregate to 0. The Break-Even-Point designates the end of a project’s investment Payback Period (see Incremental Cash Flow and Payback Period). A statement of the firm’s planned investments, generally based upon estimates of future sales, costs, production and research and development (R&D) needs, and availability of capital A financial report that indicates the amount and timing of both cash receipts and payments in the categories of operations, investments and financing. The asset pledged to a lender until a loan is repaid. If the borrower defaults, the lender has the legal right to seize the collateral and sell it to pay off the loan.

- __

-

A short-term real estate loan to finance building costs. The funds are disbursed as needed or in accordance with a prearranged plan, and the money

the proceeds of a mortgage loan. The rate is normally higher than prime, and there is usually an origination fee. The effective yield on these loans tends to be high, and the lender has a security interest in the real property.

is repaid on completion of the project, usually from -

Cost Accounting System The internal procedure used to track and allocate production costs and revenues to a product or process. Defines specific costlprofit centers, overhead vs. allocated costs, degree of cost disaggregation.

Appendix C Glossaly of Financial Terms - C-1

Cost Allocation

Equity

Finance Lease

Financial Accounting

Financial Reporting

Financial Statements

Internal Rate of Return URR)

Lease

Liquidity

Managerial Accounting

Measure of Profitability

A process within an internal cost accounting system of assigning costs and revenues to cost and profit centers for purposes of product pricing, cost tracking, and performance evaluation. The monetary value of a property or business that ex- ceeds the claims and/or liens against it by others. A lease in which the service provided by the lessor to the lessee is limited to financing equipment. All other responsibilities related to the possession of the equipment, such as maintenance, insurance and

usually noncancellable and is fully paid out (amortized) over its term. The process that culminates in the preparation of financial reports relative to the enterprise as a whole for use by parties both internal and external to the enterprise. Required by authoritative pronouncement, regulatory rule or custom, including: corporate annual reports, prospectuses, annual reports filed with government agencies, descriptions of an enterprise’s social or environmental impact. The principal means through which financial information is communicated to those outside an enterprise. Statements include the balance sheet, income statement, and statement of cash flows. The discount rate at which the net savings (or NPV) on a project are equal to zero. The computed IRR of an investment is compared to a company’s desired rate of return. A contract granting use of real estate, equipment or other fxed assets for a specified time in exchange for payment, usually in the form of rent. The owner of the leased property is called the lessor, the user the lessee. A term used to describe the solvency of a business, which has special reference to the degree of readiness in which assets can be converted into cash without a loss. Also called cash position. If a firm’s current assets cannot be converted into cash to meet current liabilities, the firm is said to be illiquid. The process of identification, measurement, accumulation, analysis, preparation, interpretation, and communication of financial information used by management to plan, evaluate, and control all

ate use, and accountability for its resources. Capital budgeting is one component of managerial accounting. An index that helps to answer the question: are the future savingdrevenues of a project likely to justify a current expenditure? Synonyms: “decision rule”, or

- -

taxes are borne by the lessee. A finance lease is -

-

activities within an organization to ensure appropri- -

C-2 -Appendix C Glossary of Financial Terms

financial index”, or “profitability index”, or “capital budgeting technique.” Includes: NPV, IRR, payback, ROI.

Net Present Value (NPV) The present value of the future cash flows of an investment less the investment’s current cost. NPV

is profitable if the NPV of the investment is positive. The owner’s equity in a given business represented by the excess of the total assets over the total amounts owing to outside creditors (total liabilities) at a given moment in time. Also, the net worth of an individual as determined by deducting the amount of all his or her personal liabilities from the total value of his or her personal assets. A type of lease, normally involving equipment, whereby the contract is written for considerably less than the life of the equipment and the lessor handles all maintenance and servicing; also called the service lease. Operating leases are the opposite of capital leases where the lessee acquires essentially all the economic benefits and risks of ownership. These leases are typically cancelable. The amount of time required for an investment to generate enough cash flow to just cover the initial capital outlay for that investment. Payback = InvestmentlAnnual Net Income A projection or estimate of what may result in the future from actions in the present. A pro forma financial statement is one that shows how the actual operations of the business will turn out if certain assumptions are realized.

Project Financialhalysis Costing (Le., calculating the costs and savings) and calculating cash flow and/or profitability measures of

u

accounts for the time value of money. An investment - -

Net Worth

__

Operating Lease

Payback Period

Pro Forma

Return on Investment (ROO

Time Value of Money

Total Cost Assessment W-4)

Working Capital, Net

- a project. A measurement of investment performance, calculated as the ratio of annual net income (minus depreciation) over the initial investment amount. ROI = Annual Net IncomelInvestment A concept that recognizes that a dollar today is worth more than a dollar next year because of the ability to reinvest the accumulated funds. A comprehensive financial analysis of the costs and savings of a pollution prevention project. A TCA approach includes: more accurate allocation of costs, more comprehensive cost inventory, longer time horizon, and use of profitability indicators that incorporate the time value of money. The excess of current assets over current liabilities. These excess current assets are available for carrying on business operations.

-

-

Appendix C Glossary of Financial Terms C-3

C-4 *Appendix C Glossary of Financial Terms

User Evaluation

Guidebook on Financing Pollution Prevention Projects: User Questionnaire

We would like to receive comments and suggestions from the users of this Guidebook so that we can improve any future editions. Please take a few

information in the Guidebook, to provide comments on its content and format, and to make suggestions for additional listings or contacts. Use additional paper if necessary.

minutes to complete the following questions to let us know how you used the -

Name

Organization

Address

City State Zip

Phone FAX

1. What information in the Guidebook did you find to be the most useful?

2. Were you able to apply for financing using the information in the Guidebook? Were you successful? Please explain.

3. Did you find the format of the Guidebook to be user friendly? Please provide suggestions for improving the format of the Guidebook.

Evaluation Form * D-1

4. What types of information in the Guidebook did you find to be not worthwhile? Please explain.

5. Please provide suggestions for changes or corrections to the information in the Guidebook

6. Please provide suggestions for additional listings in future Guidebooks:

7. Additional comments and suggestions:

Thank you for taking the time to complete this questionnaire.

Please Return to: Pollution Prevention Program NEWMOA 129 Portland Street Boston, MA 02114 Phone (617) 367-8558 FAX (617) 367-0449

D 2 * Evaluation Form

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